Bitcoin drops 20% as $ 1 billion worth of crypto has been sold. What caused the plunge this time?

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Bitcoin lost a fifth of its value on Saturday as a combination of profit taking and macroeconomic concerns triggered nearly $ 1 billion in cryptocurrency sales.

Bitcoin was down 12% at 9.20 GMT at $ 47,495 (€ 41,980.83). It fell to $ 41,967.50 (€ 37,095.07) during the session, bringing the day’s total losses to 22%.

The massive sell-off in cryptocurrencies has also seen Ether, the coin linked to the Ethereum blockchain network, plunge more than 10%.

Based on the cryptocurrency data platform Coingecko, the market cap of the 11,392 coins it tracks has fallen almost 15% to $ 2.34 trillion (€ 2.07 trillion) . This value had briefly crossed $ 3 trillion (2.65 trillion euros) last month, when Bitcoin hit a record high of $ 69,000 (€ 60,989).

Why have the markets collapsed?

The plunge follows a volatile week for financial markets. Global stocks and benchmark US bond yields fell on Friday after data showed US job growth slowed in November and the Omicron variant of the coronavirus kept investors on the lookout .

Justin d’Anethan, Hong Kong-based exchange sales manager at cryptocurrency exchange EQONEX, said he has observed the increase in leverage ratios in cryptocurrency markets as well as how whose large holders had moved their coins from wallets to exchanges. The latter is usually a sign of intention to sell.

“The whales in the crypto space appear to have moved coins to a trading platform, taking advantage of a bullish bias and the leverage of retail traders, to then drive prices down,” he said. -he declares.

The sale also comes ahead of testimonies from executives of eight major cryptocurrency firms, including Coinbase Global CFO Alesia Haas and FTX Trading CEO Sam Bankman-Fried, before the United States House Financial Services Committee. United on December 8.

The hearing marks the first time that major players in the crypto markets will testify before U.S. lawmakers, as policymakers grapple with the implications of cryptocurrencies and how best to regulate them.

Crypto traders turn bearish

Last week, the U.S. Securities and Exchange Commission (SEC) rejected a second WisdomTree spot Bitcoin exchange-traded fund proposal.

Data from another Coinglass platform showed that nearly a billion dollars (883.9 million euros) of cryptocurrency had been liquidated in the past 24 hours, with most of it on the market. Bitfinex digital exchange.

“On the contrary, this is the opportunity to buy the downside for many investors who might previously have felt they missed the boat. We can see the tie bought at a higher price, suggesting that the people are brewing money, in the crypto space, to do just that, ”D’Anethan said, referring to the cryptocurrency world’s largest stablecoin.

A drop in Bitcoin funding rates – the cost of holding Bitcoin through perpetual futures that peaked at 0.06% in October – also showed traders had turned bearish.

The funding rate on the cryptocurrency trading platform BitMEX fell to minus 0.18% from levels of 0.01% for most of November.

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