Crypto investors are reeling from an overnight crash that shrunk the crypto market by 7.92% and knocked $10,000 from price. The market cap for crypto is now $2.08 trillion, according to data metrics site Nomics.
In the early hours of the morning, Bitcoin fell to lows of $52,144, a sharp drop from highs of $61,271 yesterday.
Bitcoin took the rest of the market down with it. sank 11.45% to $2,137; at its lowest ebb it traded for $1,978, its lowest price since April 7.
Altcoins are suffering the worst today. , which made impressive gains following a string of victories in court against the US Securities and Exchange Commission, is down 20% to $1.29, while , which rallied 25% yesterday, fell 20% to $885.
The crash caused delays on crypto exchanges. From 5AM through 6:30 AM UTC, Binance reported issues with placing orders. Binance has since resolved the problems.
What’s behind the crash?
Darius Sit, co-founder of Singaporean crypto trading firm QCP Capital, told Decrypt the market crashed following a rumor that the US Treasury is investigating high-profile institutions for using cryptocurrencies to launder money.
One account cites the sources as securities lawyers familiar with US Treasury Secretary Janet Yellen’s task force. The accounts provided no further evidence. Last week, the Treasury announced it’s sanctioning 16 groups and 16 individuals, mostly linked to Russia, which it claims were using cryptocurrencies to sully the 2020 US elections.
In addition, Bitcoin’s hash rate sunk by 30% in an instant earlier this week. Primitive Crypto founding partner Dovey Wan attributes the plunge to a power outage in China’s Xinjiang province, the region that houses China’s largest Bitcoin mining operations. Authorities cut the power following accidents in three coal mines in the province.
Today’s crash is a sobering reminder that markets rarely go up forever.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.