The “Black Friday” crypto crash that wiped out $136 billion was caused by…

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Although the market is not yet closed, it is safe to say that January 21 has become the “Black Friday” of the month. With the overall market losses reaching $137 billion in the last 24 hours, here are the possible reasons why this could have happened.

1. Bitcoin-led market sell-offs

The market today saw one of the highest one-day liquidations on record as, since the market opened to the time of this report, nearly $880 million in liquidations have been recorded.

Leading the way, Bitcoin saw nearly $175 million in liquidated contracts.

This is one of the main determining factors of a stock market crash. Also in the past, with every major sell-off, Bitcoin would create a huge red candle creating a cascading effect on the rest of the market (ref. image Bitcoin Price Action).

Bitcoin liquidations coincide with major price declines | Source: TheBlock

2. Russia’s Crypto Ban

Today, one of the largest economies in the world proposed to ban the use and mining of cryptocurrencies on Russian territory.

According to them, the cryptocurrency acted as a threat to financial stability, and reasons related to the welfare of citizens and its sovereignty in monetary policy led to the ban.

This was one of the biggest hits to the global crypto market after China’s ban, as Russia is the world’s third-largest Bitcoin miner, which also raised environmental concerns. The bank has explicitly stated:

“The best solution is to introduce a ban on cryptocurrency mining in Russia”

3. The Wall Street plunge

The US stock market has had a significant impact on the crypto market in the past and for the same reason, it would not be surprising if it is also the case today. The 72-hour S&P 500 index lost almost 4%.

Moreover, since Bitcoin and the SPX share a correlation as high as 0.59, the declines were bound to affect each other and so it is possible that this is the case.

What about the best parts?

At the time of this report, almost all of the top 10 cryptocurrencies were in the low 10s, with Bitcoin losing nearly 7.83%. Not only did it lose its $40,500 support, but it also tested the critical $38,000 level.

Luckily, BTC managed to hold above $38,310 at press time and as long as it maintains movement in this zone, the market will be safe.

Bitcoin Price Action – Source: FXEmpire

Ethereum, on the other hand, did not lose its critical support of $2727, it was trading at the time of this report at $2789, losing more than 11% throughout the day.

Ethereum Price Action – Source: FXEmpire

Finally, the token of the world’s largest cryptocurrency exchange, Binance Coin (BNB), also lost almost 11.32%, but it was, thankfully, trading far at $418, far from its critical support of $399.

Binance Coin Price Action – Source: FXEmpire

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