The global cryptocurrency market has experienced a sharp downturn, wiping billions of dollars in investor wealth. According to CoinGecko data, the market’s total value has plunged by over $600 billion in just a week, marking one of the steepest declines in recent months.
Bitcoin, the largest cryptocurrency, fell 4% to $103,550 on Friday morning, hitting its lowest level since June after reaching a peak of $126,000 in early October. Other major tokens also suffered heavy losses, with Ethereum slipping under $3,700 on Friday. The Binance-linked coin, the world’s fourth-largest cryptocurrency, slumped nearly 11% on the same day, according to Bloomberg.
FxPro chief market analyst Alex Kuptsikevich described Friday’s drop as an “even more dangerous dynamic” than the previous week, indicating a “massive sell-off in search of a new bottom”, Barron’s reported.
What triggered this decline?
The primary cause of the market turmoil was the escalation of the US-China trade war. Last Friday, CNN reported that the crypto market experienced a “mini crash” after US President Donald Trump threatened to impose 100% tariffs on some Chinese imports, resulting in $19 billion in liquidated positions.
Furthermore, a massive flow of investors exited the crypto market, with them withdrawing a net $593 million from US-listed Bitcoin and Ether exchange-traded funds on Thursday. This sell-off was driven by risk-off sentiment, which has been sweeping through markets.
“More than anything, I think crypto is acting like a canary in the coal mine, suggesting the market is on edge because of emerging credit worries,” Matthew Hougan, chief investment officer at Bitwise, told Bloomberg.
Gold and silver rise
After a week-long rout that erased hundreds of billions in digital asset value, Bitcoin has again failed to live up to its billing as a safe harbor asset. Meanwhile, traditional havens such as gold and silver continue to hit fresh highs, while Bitcoin disappointed, Bloomberg reported.
The news report stated that following the crash, the crypto-exchange Binance has offered its customers and businesses nearly $600 million in compensation.
