The cryptocurrency market suffered a sharp and sudden downturn over the past 24 hours, erasing $150 billion in value as total market capitalization fell from $3.10 trillion to $2.95 trillion.
The drop marks one of the steepest single-day declines of the year and comes at a time when the market was attempting to mount a recovery following the November downturn that nearly saw Bitcoin (BTC) lose the $80,000 support level.
Bitcoin, which often mirrors broader risk sentiment, plunged sharply. The maiden cryptocurrency is down 5.07%, trading around $86,709 and dragging its $1.7 trillion market cap lower.
Ethereum (ETH) followed with a 5.67% decline to $2,837, while other major altcoins suffered similar losses. XRP fell 6.67%, and BNB dropped 6.33%, deepening the red across the market. Solana (SOL) suffered one of the steepest declines among top-tier assets, sliding 7.14% to $126.97.
Why the crypto market is down
At the center of the sell-off was a historic move in Japan’s bond market, where for the first time since 2008, yields on 2-year Japanese Government Bonds breached the 1% threshold, signaling heightened expectations of a Bank of Japan rate hike.
Additionally, the crash was magnified by severe stress in derivatives markets. More than $573 million in positions were liquidated within a day, mostly long positions caught on the wrong side of the sudden reversal. The wave of forced liquidations accelerated the drop, creating a feedback loop of cascading losses.
Adding to the pressure, the People’s Bank of China issued a weekend statement warning against illegal digital asset activities. The announcement weighed heavily on Hong Kong–listed crypto-related companies, which fell sharply during Monday trading and contributed to the broader regional downturn.
The crash also reflects a broader global risk-off sentiment as markets open a new month. To this end, investors remain cautious amid uncertainty surrounding potential U.S. Federal Reserve rate cuts, while concerns over stretched valuations, particularly in AI-linked equities, continue to stir volatility.
Featured image via Shutterstock
