A steep sell-off across the cryptocurrency market wiped out more than $15bn (£13bn) overnight. Bitcoin fell from $19,997 to $18,806, with the price shedding over $1,000 in value in less than 24 hours.
The crypto market cap was hovering around the $1tn mark on Tuesday, then a sudden rapid sell-off saw all blue-chip crypto charts turn red as prices plummeted.
The combined valuation of all cryptocurrencies fell by over $15bn to now stand at around $984bn.
Read more: Crypto live prices
At first, there were no obvious reasons as to why the crypto-market saw such a sudden wipe-out.
But analysts have attributed the massive sell-off to the macroeconomic reaction to Russia cutting off natural gas supplies to Europe.
Germany, Italy and other European countries are dependent on Russian gas, and traders reacted with risk-off behaviour.
After the massive sell-off, there were heavy liquidations across all blue chip crypto positions.
Data from coinglass.com reveals how long positions took the lion's share of positions liquidated with an approximate 60% to 40% long/short ratio.
In the past 24 hours, 102,144 crypto traders were liquidated, the total liquidations come in at $356m.
The largest single liquidation order happened on the Okex exchange and was a BTC-USDT swap valued at $2.57m.
The liquidations of leveraged bitcoin long positions accelerated the market's downward plunge.
Another reason for the tilt into the red was a pattern that traders have recognised; that there is a stronger downside correlation between bitcoin and the Nasdaq (^IXIC) than the reverse price movement.
Again, bitcoin followed US tech stocks into negative territory with the Nasdaq Composite sliding 0.74% to 11,544.91, revealing a worrying seventh day of losses, its longest since 2016.
The Dow Jones (^DJI) closed more than 100 points lower in the post-Labour Day session.
The Dow Jones Industrial Average fell 173.14 points, or 0.55%, to close at 31,145.30 and the S&P 500 (^GSPC) slipped 0.41% to 3,908.19 after a day of heavy selling on Tuesday.
Michael Burry, the hedge fund manager who was characterised by Christian Bale in The Big Short, tweeted out a particularly bearish statement this morning, stating: "Crypto crash. Check Meme crash. Check. SPAC crash. Check. Inflation. Check. 2000. Check 2008. Check 2022. Check."
Crypo crash. Check
Meme crash. Check.
SPAC crash. Check.
— Cassandra B.C. (@michaeljburry) September 7, 2022
The Dollar Index has moved higher as a result of the macroeconomic changes.
The yield on US 10-year Treasury bonds jumped as much as 0.162 percentage points to 3.353% on Tuesday, adding to the rout out of stocks.
The week ahead seems gloomy for investors in both traditional and crypto markets, who are looking ahead to a possible fresh rate hike decision from the European Central Bank due out later this week.
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