The cryptocurrency market experienced a significant downturn Sunday and Monday (Aug. 4-5), resulting in a loss of approximately $367 billion in value over a 24-hour period.
This plunge was primarily driven by substantial drops in the prices of bitcoin and ether, the two largest cryptocurrencies, CNBC reported Monday.
The decline in the crypto market coincided with a broader slide in equities across Asia-Pacific markets and the Nasdaq’s worst three-week stretch in two years, according to the report.
The crypto market’s sharp decline was driven by investors selling off risky assets, the report said. Bitcoin, the world’s largest cryptocurrency, experienced a 15% drop in 24 hours, reaching its lowest level since February. Ether, the native token of the Ethereum blockchain, plummeted by 22%, erasing its gains for the year.
Other cryptocurrencies, such as Binance’s BNB token and solana, also experienced significant losses, with their prices dropping by 20% and 22% respectively, per the report.
Several factors contributed to the recent crypto market plunge, according to the report. First, the broader slide in equities across Asia-Pacific markets had a negative impact on investor sentiment. Japan’s Nikkei 225 dropped over 12%, extending losses from the previous week, after the Bank of Japan announced a hike in its benchmark interest rate to the highest level in 16 years. Additionally, the Nasdaq, a tech-heavy index, experienced its worst three-week stretch since September 2022, further dampening market confidence.
Furthermore, disappointing earnings, a weaker-than-expected jobs report, higher unemployment, and a declining manufacturing sector in the United States influenced the recent drop in stocks, the report said.
The U.S. Federal Reserve’s decision to hold its benchmark rate steady and not promise a rate cut in September also impacted market expectations, per the report. Lower interest rates are typically associated with better performance for risky assets such as cryptocurrencies.
Investors are watching for new trade data from China and Taiwan, as well as central bank decisions in India and Australia, for potential impacts on the crypto market, according to the report.
The recent approval of new spot exchange-traded funds (ETFs) for bitcoin and ether by the U.S. Securities and Exchange Commission (SEC) likely expanded the base of investors affected by the market downturn, the report said.
