Cryptocurrencies bitcoin (BTC), ethereum (ETH) and Ripple’s XRP all plunged on the crypto markets today (Thursday, October 11).
Bitcoin’s price plunged by around $400 in a matter of 30 minutes earlier this morning, according to Coinmarketcap.
BTC traded for $6,507 at 12.53am UTC before plummeting down to $6,128.24 by 1.26am UTC.
Bigger losses were sustained by the crypto’s market capitalisation – the digital token’s overall market value.
According to crypto trackers at CoinMarketCap, all of the top 10 cryptocurrencies took a hit during the past 24 hours.
Bitcoin’s market cap crashed alongside the token’s price from a market cap of $113billion at 1.09am UTC to $108billion just six hours later.
As a result of the sudden plunge in value, the entire crypto market capitalisation is down from $216billion at 12.37am UTC to $203billion by 2.17am UTC.
At 8.52am UTC ETH is down 10.78 percent, XRP is down 11.47 percent, bitcoin cash is down 11.51 percent and EOS is down 8.54 percent.
What caused bitcoin’s price to crash?
Bitcoin is now trading at its lowest price since September 17th.
The market drop comes amid wider losses sustained on the global markets in Asia, Europe and the US.
“Having seen global stock markets take a battering in the last 24 hours on trade fears and rising interest rates as well as the price of gold and the VIX Volatility Index heading higher, it is strange that we now see the crypto market also following suit,” David Thomas, the director of Mayfair-based cryptocurrency broker GlobalBlock.
After an incredible period of gains in 2017 which saw bitcoin reach highs of almost $20,000 in December last year, the token crashed early in 2018.
The token’s volatility continued over the more recent months, peaking at $8,398.63 on July 24 before dropping below $6,200 on August 10.
In the wake of today’s massive sell-off, analysts have now warned the days of “playing safe” with cryptocurrency are over.
Ryan Rabaglia, head of crypto rating at OSL, said in his opinion bitcoin’s volatility could see future sell-offs further test its 2018 low of $5,800.
He said: “The global sell-off in equities has indeed spilled over to the crypto space.
“The days of crypto being the safe-haven play and having a high degree of detachment from the rest of the world are seemingly diminishing.”
Turkish analyst Nouriel Roubini, known in the crypto circles as “Dr Doom”, will testify before the US Senate today about the dangers of cryptocurrency.
In a statement published before the hearing, he labelled bitcoin and fellow cryptocurrencies the “mother of all bubbles”.
Mr Roubini said: “It is clear by now that bitcoin and other cryptocurrencies represent the mother of all bubbles, which explains why literally every human being I met between Thanksgiving and Christmas of 2017 asked me first if they should buy them.”
The analyst warned the too many people without any “financial literacy” have jumped the bitcoin bandwagon, including scammers and criminals, which has caused the currency to “bust and crash in a matter of months”.
“There was a growing feeling that bitcoin was a ‘digital gold’ asset and as such should weather such wider storms as equity market volatility. The fact that this hasn’t happened is interesting as it suggests to us that more and more seasoned investors with wider portfolios are getting into cryptocurrencies and are using similar equity strategies to manage their positions.
“Financial markets tend to fall a lot faster than they rise and when the equity markets see a move of this magnitude, perhaps there is a tendency to also flatten positions in crypto assets to clear the decks completely. This move indicates a high correlation between equities and cryptos, so if the stock market rout continues, then we could see further weakness in bitcoin. The key support levels to watch to the downside are $6,140 and $6,000.”