In a dramatic turn of events, the cryptocurrency market experienced a major sell-off on Friday, April 12th. Bitcoin (BTC), the world’s leading digital currency, plunged from near $71,000 to below $66,000 in a matter of hours. This sharp decline represents a loss of over 5% in a single day.
The selling pressure wasn’t limited to Bitcoin. Altcoins, cryptocurrencies other than Bitcoin, witnessed even steeper declines. Ether (ETH), the second-largest cryptocurrency, suffered an initial drop of 12% before recovering slightly. Smaller altcoins faced the brunt of the sell-off, with some like Cardano (ADA) and Avalanche (AVAX) plummeting as much as 20%. The broad-based CoinDesk 20 Index, which tracks the performance of the top 20 cryptocurrencies, sank nearly 10%.
Analysts attribute the sudden downturn to a combination of factors. Rising geopolitical tensions in the Middle East, with potential conflict between Iran and Israel, triggered a risk-off sentiment across traditional markets. This negativity spilled over into the cryptocurrency space, leading investors to flee riskier assets like Bitcoin and altcoins.
Further compounding the issue was a significant liquidation of leveraged positions. With Bitcoin flirting with $71,000, many traders had placed leveraged bets on further price increases. The unexpected drop triggered margin calls, forcing them to sell their holdings to meet margin requirements. This further accelerated the downward spiral, leading to a total of $850 million in liquidated positions across the crypto market according to CoinGlass data.
The recent sell-off serves as a stark reminder of the inherent volatility of the cryptocurrency market. While Bitcoin has experienced significant gains in recent months, such dramatic price swings highlight the risks involved for investors.