The crypto market is experiencing a substantial downturn, with a staggering $325 billion in market capitalization erased since Friday morning, according to data from Coinglass. This dramatic decline was marked by a shocking moment when $100 billion disappeared within just one hour, leaving investors in a state of disbelief.
At the time of writing BTC was trading at $89.640 minus 7.7% in 24 hours.
Despite the magnitude of this crash, major news outlets have largely overlooked the situation, giving the impression that the market’s struggles are no longer a priority for the public. Even once-thriving meme coins, which had captured the attention of many investors, have suffered severe losses as liquidity across the board has dried up, raising fears of further declines.
The Bybit Hack: A Catalyst for Market Turmoil
The sell-off began in earnest following the Bybit hack on February 21, where North Korea’s Lazarus Group executed the largest financial heist in history, siphoning off $1.5 billion from the exchange’s Ethereum wallets. This theft not only eclipsed the previous record of $611 million set by the PolyNetwork hack in 2021 but also sent shockwaves through the entire crypto ecosystem.
In the wake of this incident, Ethereum faced even greater challenges as traders rushed to withdraw their funds, fearing a collapse akin to the infamous FTX debacle. “No one wants to be caught off guard again,” noted a seasoned trader, highlighting the pervasive anxiety within the market.
Bitcoin Follows Suit: Market Correlation with Traditional Stocks
Initially, Bitcoin appeared to evade the chaos, but the tide turned when the S&P 500 plummeted on Friday. As traditional stocks fell, Bitcoin broke down, losing its critical $98,000 support level. This connection between crypto and traditional markets has raised concerns among investors about the stability of digital assets in times of economic uncertainty.
One significant development contributing to Bitcoin’s decline was the announcement by Citadel Securities that it would enter the crypto space as a liquidity provider. Instead of instilling confidence, this news triggered a “sell the news” reaction, prompting many investors to exit their positions. “It feels like a perfect storm,” said an industry analyst, reflecting the sentiment among traders.
Uncertain Times Ahead for the Crypto Market
As the crypto market grapples with these unprecedented challenges, the future remains uncertain. The impact of the Bybit hack and the subsequent market reactions have left many investors wary. With liquidity concerns escalating and confidence waning, the path forward for cryptocurrencies like Bitcoin and Ethereum is fraught with peril.
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