Regular crypto viewers would already know about the scenario of the crypto market right now. The whole crypto market went down along with Bitcoin and Ethereum, which have fallen 11% and 15% respectively. According to Coingecko, the total crypto market capitalization had a 13% drop in the last 24-hours. Let’s dig into the reasons for cryptocurrencies’ fall in price value.
It’s been an easy task to connect the dots between crypto-asset price drops and price hikes. This has been flawed for years in terms of connecting things to the scenario and proving it to be the right thing. Now, the story behind Bitcoin’s fall is that BTC became legal tender in El Salvador. Then what’s the cause for Ethereum’s price drop? What about other cryptocurrencies? Let’s dive into the reasons that came out from analysts.
Responding to Bitcoin’s price fall, Arcane Research analyst Vetle Lunde says:
“Such massive stories frequently lead the market to over-emphasize when pricing in the impact. This appears to be the case again this time.”
At the beginning of June, the president of El Salvador, Nayib Bukele announced that he passed a bill for legislation to make BTC as legal tender. The bill was later legislated and put into effect today which has shrunk back to $53,000 from $37,000 over the past three-months. Significantly when the day came, the price began to dip.
The analysts also point out over-leveraged positions might also pull down Bitcoin’s price. However, over-leveraged positions magnified the drop. Crypto traders, for example, can obtain 100x leverage on the exchange Bybit. That is, if you deposit one-tenth of a Bitcoin, you will be able to trade ten Bitcoins.
Leverage is fun when prices rise, allowing speculators to benefit from bull markets without much capital. On the other hand, it is less fun when the market falls because the downside of leveraging is that you are winding up; the more levers, the lower the price falls before your coins are taken up by the exchange, in order to avoid further losses. That 0.1 BTC you put in is gone.
Moreover, this was a snowball-effect as it started with a price fall which made more users sell and the price dipped. When the BTC price initiated a fall, it triggered the users which led many people to sell at this moment. Here ends the reason with Bitcoin.
Do Ethereum and Other Coins Face The Same Issue?
The strong bullish pattern for altcoins over the past month has created chaos in the market. The current scenario is a mess for users as the whole crypto market began to fall. But let’s look out the positive trends of altcoins that reached highs since the start of this month.
Bybt data show that a futures trading platform has liquidated $1.5 billion in Bitcoin over the past 24 hours. Whereas the same fate has been endured at $900 million in Ethereum. For altcoins, Cardano which will launch smart contracts next weekend has surged to 60% even after the 17% fall.
Similarly, SOL’s price still follows an uptrend setting new highs every week and SOL has already surpassed XRP. Now, SOL holds the sixth position by market capitalization. Some cryptocurrencies have performed well over the past month, although it was a green start this month for the crypto-industry.