LUCKNOW (CoinChapter.com) – The cryptocurrency market experienced a significant downturn on August 5, 2024, with major cryptocurrencies seeing sharp declines. This sudden crash wiped out billions in market value and caused widespread liquidations of leveraged positions.
Bitcoin, the leading cryptocurrency, plummeted below $53,000, reaching lows not seen since February earlier this year. The price drop was swift and severe, falling from around $58,350 to as low as $49,513 in less than five hours – a 15% decline. At the time of reporting, Bitcoin had slightly recovered to $54,094, but the impact of the crash was still evident.
Ethereum, the second-largest cryptocurrency by market cap, also saw the sharp decline. It dropped 18% from $2,695 to $2,118 before stabilizing around $2,358.
The altcoin market also faced severe losses across the board. BNB, the native token of the Binance ecosystem, fell 17.36% to $436.41. Dogecoin, the popular meme cryptocurrency, dropped 16.20% to $0.09064. Polkadot experienced a 21.51% decline, trading at $3.96.
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Stablecoins Provide Safe Haven As Bitcoin Plummets
In contrast to the broader market decline, stablecoins like Tether (USDT) and USD Coin (USDC) maintained their dollar peg, providing a safe haven for traders looking to exit volatile positions. Both USDT and USDC showed slight gains of 0.03% over the past 24 hours.
Despite the price drops, trading volumes surged as panic selling set in. Bitcoin’s 24-hour trading volume reached $102.17 billion, while Ethereum saw $68.36 billion in trades.
This market turbulence led to massive liquidations of leveraged positions. Over $900 million worth of cryptocurrency futures positions were forcibly closed in the past 24 hours, with long positions (bets on price increases) accounting for the majority of these liquidations.
Ethereum traders were hit particularly hard, with over $315 million in leveraged long positions being wiped out.
What Could Be The Reason Behind This Crash?
The crypto market crash coincided with turmoil in traditional financial markets, particularly in Japan. The Nikkei 225, Japan’s main stock index, fell by 7.1% in early trading hours. This followed a significant drop in Japanese bank stocks earlier in the week, triggered by the country’s central bank decision to raise interest rates.
Several factors may have contributed to this market downturn, including weak job data from the United States, slower growth among leading tech companies, and concerns about potential selling pressure from major crypto trading firms.
The sudden crash briefly erased around $500 billion from the total cryptocurrency market capitalization over just three days, the largest such decline in over a year.
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