Why did the crypto market crash today? Back to the bear market
Today’s crypto market is in the red. On Friday, the digital asset market experienced a broad sell-off as investors became concerned about the future of crypto-friendly banks based in the US. The total crypto market cap has fallen by 7% in the last 24 hours, losing more than $60 billion. It is now worth $930 billion.
Crypto markets welcome back winter
Following US President Joe Biden’s latest budget and the collapse of “cryptobank” Silvergate, Bitcoin fell below $20,000 for the first time in nearly two months. According to CoinMarketCap data, the price of Bitcoin fell to $19,945 on March 10 before recovering to hover just above $20,000 today.
Bitcoin had a fantastic start to 2023, but fell as much as 5% in one hour on March 3 due to Silvergate uncertainty. Since then, the price does not seem to have managed to rise. Ethereum is down by the same amount this period and is currently trading at $1.421 per coin.
According to Coinglass data, $308 million was liquidated from the DeFi market in the last 24 hours. The Bitmex exchange received the largest single liquidation order of $9.49 million. Binance, on the other hand, reported a $106 million liquidation the previous day.
At the same time, the OKX exchange followed the world’s largest exchange, and reported a liquidation of 74 million dollars. According to data, Bitcoin, the world’s largest coin, lost $120 million in the last 24 hours. ETH saw a liquidation of $75 million in the same period.
Reasons why the crypto market is crashing
According to reports, the market value of US stocks and digital assets has fallen by approximately $2 trillion in the last 24 hours. Silicon Valley Bank failed to reassure its customers that their funds were safe after a massive 60% drop in its share price.
This resulted in a massive sell-off in both trading markets, with stock market futures falling to two-month lows and Bitcoin falling below the critical $20,000 threshold. However, SVB’s failure would be the second largest in US history. This can be a significant red flag for the financial markets.
In the same week, two major American banks collapsed. Following a customer exodus, the crypto bank Silvergate went into voluntary liquidation earlier this week. Just a few days later, on March 9, Silicon Valley Bank (SVB) stock fell after the company announced a $1.75 billion stock sale to bolster its balance sheet. Some market analysts are undoubtedly predicting a digital asset doom and telling traders to get out of the business.
In a bleak economy still struggling after prolonged shutdowns and a year-long war in Ukraine, all eyes are once again on the banks. BitMEX co-founder Arthur Hayes claimed on March 10 that Federal Reserve Chairman Jerome Powell “may have destroyed the US banking system.”
Second, New York Attorney General Letitia James filed a lawsuit against crypto exchange KuCoin on Thursday for allegedly selling unregistered securities in violation of the law.
This lawsuit has implications for the entire digital asset market, as it could change how regulators view traditionally commodity-like cryptocurrencies like Ether. James wants to ban the exchange from doing business in New York.
Third, President Biden’s proposed budget includes a 30% tax on the electricity used to mine cryptocurrencies. White House officials argue that the energy-intensive practice is hindering the transition to a low-emissions energy future.
The recent decline in US stocks, particularly in the financial sector, has hurt investor sentiment. The Dow Jones Industrial Average fell more than 500 points on Thursday. Other major indexes are also poised for significant weekly losses.
In other news, the Biden administration is proposing to close a tax loophole to raise $24 billion for the US government. The loophole allows investors to harvest their cryptocurrency losses to offset capital gains and income for individuals.
In addition, concerns about rising interest rates persist after the hawkish comments of central bank governor Jerome Powell. On Friday, there will be an important report on wages, which may affect the direction of interest rates.
Cardano crypto prices fell by 3.57% today. XRP is down 4.04%. The price of Solana fell by 7.63%. The price of polygons has fallen by 4.08%. Polkadot prices have fallen by 3.80%. Huobi Token is down 21.21%.
Meme cryptos have also experienced a significant drop in the last 24 hours. Dogecoin’s price is down 8.24%, while Shiba Inu’s price is down 9.18%.
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