XRP and Dogecoin Plummet 12%, Fueling Record-Breaking Altcoin Sell-Offs
The cryptocurrency market experienced one of its worst days in recent months on Tuesday, with major tokens and midcaps experiencing a sharp decline during early Asian hours. The selling pressure was intense, with some cryptocurrencies falling as much as 15% in the past 24 hours.
Market Capitalization Sees Largest Drop Since October
The overall market capitalization dropped by 6.5%, marking one of the largest declines since October. The broad-based CoinDesk 20 (CD20) index also suffered, slumping 7%. Bitcoin, which is often considered a benchmark for the entire cryptocurrency market, remained relatively unchanged, but other major tokens and midcaps fared poorly.
Bitcoin, Ether, and Solana Suffer Significant Losses
- Bitcoin: The leading cryptocurrency dropped 3%, a significant decline considering its stable performance in recent weeks.
- Ether (ETH): Ethereum’s native token fell 7%, continuing the trend of weaker performance compared to Bitcoin.
- Solana (SOL): Solana’s SOL token also experienced a 7% drop, highlighting the broader market downturn.
Altcoin Futures Lead Market Losses
The altcoin futures tracked under ‘Others’ by data provider CoinGlass led market losses, with over $560 million in liquidations. Dogecoin (DOGE) and XRP futures suffered the most significant losses, with each losing more than $70 million.
Unusual Selling Pressure Spurred by Google’s Quantum Computing Announcement
The unexplained selling pressure has raised concerns about crypto privacy and wallet security following Google’s announcement of benchmark tests on its new Willow quantum computing chip. Market analysts and traders have warned of short-term selling pressure amid an overheated market after a November rally.
Market Analysts Weigh In: Short-Term Selling Pressure Ahead
Some market watchers pointed out that the selling pressure first rose from U.S.-listed Coinbase, with an unusual market impact on XRP and metrics indicating that traders were over-leveraged. This has led some analysts to speculate about a potential turning point in the market.
Quant Trader @ltrd_ Shares Insights
The widely followed quant trader shared their insights on the situation: "Something absolutely strange happened… On a large, relatively mature market, we witnessed a cascade of big sell orders that caused the market to drop by over 5%. We don’t know exactly what happened, but it’s certainly unusual."
Over $1.5 Billion in Longs Liquidated
The fall led to over $1.5 billion in longs, or bullish bets, being liquidated, the highest such figure since 2021. This has raised concerns about market volatility and potential short-term selling pressure.
Market Turning Point: Overreaction or Reversal?
Large-scale liquidations can indicate market extremes, like panic selling or buying. A cascade of liquidations might suggest a market turning point, where a price reversal could be imminent due to an overreaction in market sentiment.
