The cryptocurrency market has experienced a sharp decline in the last day, wiping out more than $127 million worth of digital assets from traders’ portfolios.
The main catalyst for this sell-off was the drop of Bitcoin, the leading and most influential cryptocurrency, below the $26,000 mark.
Bitcoin is often considered as a store of value and a hedge against inflation, especially in times of economic uncertainty and geopolitical tensions. However, it is also subject to high volatility and price fluctuations, depending on various factors such as supply and demand, regulatory developments, technological innovations, and market sentiment, TEKEDIA.com reported.
In the past 24 hours, Bitcoin has lost more than 10% of its value, falling from around $29,000 to below $26,000 at the time of writing. This is the lowest level since December 2020, when Bitcoin was on its way to reach its all-time high of over $64,000 in April 2021.
There are several possible explanations for this sudden drop. One of them is the ongoing crackdown on crypto mining and trading in China, which has reduced the hash rate and liquidity of the Bitcoin network.
Another factor is the rising popularity of alternative cryptocurrencies, such as Ethereum, Cardano, Solana, and others, which offer more functionality and innovation than Bitcoin. Some investors may have decided to diversify their portfolios or switch to these newer platforms, reducing the demand for Bitcoin.