Bitcoin price drop shakes global crypto markets, wiping out hundreds of billions

In a flash crash, the bitcoin plummeted dramatically, eclipsing all other cryptos less than a week after reaching an all-time high. On Thursday, bitcoin was trading near US$58,000, down more than $6,000 from its last peak this week.

The collapse in cryptocurrency prices has wiped out hundreds of billions of dollars from global markets. As a result, the values of several other cryptocurrencies, including Ethereum, Binance Coin, Cardano, Solana, and Ripple, have fallen.

This comes less than a week after Bitcoin reached a fresh all-time high of around $67,000.

How did the flash crash occur?

According to blockchain statistics, the crisis is partly fueled by long-term investors selling at a premium to pocket profits.

However, it occurred concurrently with financial firm Direxion registering for a new bitcoin exchange-traded fund (ETF) that would gamble against the cryptocurrency’s future price.

The new bitcoin ETF will be known as the Direxion Bitcoin Strategy Bear ETF, as shown in a filing with the Securities and Exchange Commission in the United States.

The proposal comes less than a week after the SEC approved the ProShares Bitcoin Strategy ETF, the first bitcoin futures exchange-traded fund.

New entrants to the market

The approval of the ETF aided in propelling bitcoin’s price to a new all-time high, as analysts predicted the new ETF would help lift investor exposure to cryptocurrencies.

Meanwhile, El Salvador’s President Nayib Bukele tweeted that his government had “purchased the dip,” adding 420 BTC to the country’s treasury at the cost of $25 million.

This year, the values of bitcoin and other cryptocurrencies have skyrocketed. The total cryptocurrency market capitalization has surpassed $2.6 trillion. Bitcoin alone has increased in value by about 400%. It has, however, fallen precipitously in the last 24 hours.

 

Image courtesy of Cointelegraph News/YouTube

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