The crypto market, known for its volatility, has just suffered a major shock. Bitcoin, the undisputed leader of cryptocurrencies, experienced a brutal fall in the space of a day. A drop in value that has severely affected the performance of altcoins.
Bitcoin collapses and altcoins plunge
The valuation of bitcoin experienced a significant drop during the day of April 12. The queen of cryptos has fallen from its daily peak of $71,000 to below $65,000. If this poor performance already worried bitcoiners, they will quickly be joined in their anxiety by altcoin enthusiasts.
Indeed, some of the leading alternative cryptocurrencies such as ether, BNB and Solana's SOL have recorded significant drops before partially recovering their losses. Specifically, ether fell to $3,100, losing 12% of its value, before recovering slightly to $3,244. BNB and SOL lost more than 14% of their valuation.
Cryptocurrencies such as ADA, AVAX and Bitcoin Cash (BCH) were also affected by the fall of bitcoin with losses ranging between 15% and 20%. This sharp fall reflects a broader trend of liquidation in digital assets, driven by a wave of short selling and the triggering of automatic stops, exacerbating losses.
The volatility of the crypto market on April 12 also led to the evaporation of approximately $850 million in leveraged derivatives positions. These moves were mostly concentrated in long positions, where approximately $770 million in liquidations were recorded, highlighting the profound impact of sharp market movements on leveraged investors.
Impacts on traditional financial markets and other assets
The significant decline in bitcoin and these altcoins occurred amid broader disruptions affecting financial markets as a whole, following heightened geopolitical tensions and economic risks. Stock indexes, such as the S&P 500 and the Nasdaq 100, each posted declines of around 1.7% in response to fears of conflict in the Middle East and warnings by the United States of possible aggressive actions by Iran.
In the current climate of uncertainty, investors have sought refuge in assets deemed safer. U.S. Treasuries and the U.S. Dollar benefited from increased demand. At the same time, the price of gold reached a new all-time high of over $2,400, while that of oil rose about 1%.
The fall of altcoins after the fall in the valuation of bitcoin illustrates the sensitivity of these assets to fluctuations in the flagship crypto. As the global market comes under economic and geopolitical pressure, investors should exercise caution.
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