Bitcoin’s (BTC) latest slump saw total crypto market capitalization shrink below the $1 trillion mark for the first time since January 2021.
Bitcoin has lost over 12% in the past 24 hours, and is currently trading around $23,900- its lowest level since late-2020. Its recent crash was triggered by higher-than-expected inflation data on Friday, with the price steadily worsening through the weekend.
But no.2 cryptocurrency Ethereum has fallen much more than Bitcoin. The token is currently languishing at $1,196- about 75% off its record high. Concerns over a meltdown in the DeFi space have dented Ethereum in the short term.
With the two largest tokens logging massive declines, total crypto market capitalization has sunk by over 12% in the past 24 hours to $961.8 billion- sinking below the $1 trillion mark for the first time in 17 months.
What is driving the losses?
The key source of uncertainty in the market is a two-day Federal Reserve meeting starting on June 14. Investors fear that the Fed may increase interest rates by more than expected, especially in the light of higher-than-expected inflation figures in May.
Additionally, major crypto lender Celsius suspended withdrawals on Monday in light of a severe liquidity crunch. The move stems from a depegging of staked Ethereum (stETH), which is exposing several other DeFi platforms to potential liquidations.
Uncertainty over staked Ethereum, coupled with fears that platforms could sell their crypto holdings to cover their positions, has also rattled broader markets.
Losses in Bitcoin and Ethereum have spilled over to a bulk of the market, with all of the top-50 cryptocurrencies logging large declines in the past 24 hours.
Major altcoins including Solana, Cardano and Ripple have slumped between 12% to 20%.
Bitcoin, Ethereum see mass liquidations
While major Bitcoin and Ethereum holders are still far from a margin call, retail traders are bearing the brunt of liquidations. Data from Coinglass shows that the crypto market has seen nearly $1 billion liquidations in the past 24 hours.
Long positions on Bitcoin and Ethereum accounted for 40% of all liquidations, coming up to over $400 million.
The crypto market is seeing its worst levels of liquidations since the height of the Terra crash in May.