Crypto investors brace more pain as Bitcoin and top altcoins fell sharply. The greed and fear index is currently in the “fear” zone.
The crypto market lost over $1 billion in the past 24 hours. Bitcoin, the world’s largest cryptocurrency, was down below $26,000 for the first time since June 2023. Ethereum, the second-largest cryptocurrency, also fell sharply, dropping below $1,700.
Other top altcoins also suffered major selloffs in the last 24 hours, with Binance Coin (BNB), Cardano (ADA), Solana (SOL), Polkadot (DOT), and Polygon (MATIC) losing from 5% to 8% their value, according to data from CoinMarketCap.
Why is the Market Down?
The most significant loss went to Ripple (XRP), which was down 15% in a day. The coin’s recent crash is presumably fueled by the news that Judge Analisa Torres just allowed the US Securities and Exchange Commission (SEC) to file an appeal that requests a review on the court’s verdict of the legal case between Ripple Labs and the US securities regulator.
The SEC’s motion for an interlocutory appeal is a significant development in the Ripple case. The appeal process can be time-consuming and complex, but it is an opportunity for the SEC to challenge the district court’s ruling.
While the news particularly impacts Ripple’s price, the highlighted factors behind the market crash is SpaceX sale of Bitcoin and Evergrande’s bankruptcy filing.
Elon Musk’s aerospace company, SpaceX, reportedly sold a staggering $373 million worth of Bitcoin during the years 2022 and 2021, according to recently uncovered private equity documents disclosed by the Wall Street Journal.
The exact timing and quantity of Bitcoin transactions, however, remain undisclosed, leaving market analysts speculating on the potential extent of SpaceX’s remaining Bitcoin holdings.
SpaceX and Evergrande in Spotlight
While SpaceX’s sister company, Tesla, continues to hold its Bitcoin reserves, this significant liquidation has raised questions. Tesla initially invested $1.5 billion in Bitcoin, but with a recent offloading of $936 million, the company’s stance appears less resolute.
The cryptocurrency market responded to the SpaceX news with a palpable downturn. Bitcoin, in particular plummeted from $27,700 to a worrisome low of $25,166 on the Binance exchange within a mere 24 hours, marking a sharp 12.6% decrease.
Shortly after SpaceX’s news, China Evergrande Group, a China’s real-estate titan, reportedly filed for bankruptcy protection in the US. This move has sent ripples of concern throughout the financial world. The bankruptcy, filed under Chapter 15 of the
Bankruptcy Protection Act, permits American courts to participate in cross-border insolvency cases.
Evergrande’s downfall has been long anticipated, driven primarily by the Chinese government’s implementation of the “three red lines” property policy,” designed to mitigate systemic risks by restricting loans to real estate enterprises.
Like its counterparts in the Chinese real estate sector, Evergrande has grappled with this policy since mid-2021, leading to its current dire situation.
The group’s overextension across diverse sectors, coupled with its overreliance on financial resources, has culminated in a staggering total debt estimated at 2.437 billion yuan ($340 billion). Accounting for roughly 2% of China’s GDP, market observers have speculated that Evergrande’s insolvency could be the next black swan.
The potential global repercussions of the Evergrande crisis are significant. China is a major economic power, and its financial problems could have a ripple effect throughout the global economy.
Amid the ongoing turbulence, Bloomberg reported that the SEC is likely to give the green light to Ether-futures ETFs. According to the previous reports, more than 10 institutions, including ProShares, Volatility Shares, Bitwise, Grayscale, VanEck, and Roundhill, applied to launch this futures product.
The approval of Ether-futures ETFs could be significant for the cryptocurrency industry. However, volatility and uncertainty are likely to persist in the days ahead. With this kind of market, it is best to see dips as a buying opportunity.
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Author: Nicholas Say