Cryptocurrency holders are currently bracing for precipitous drops on the value of their portfolios, as the cumulative market value of cryptocurrencies has just bled the equivalent of $250 billion in less than 24 hours. The market downturn is being attributed to the Evergrande turmoil, which sparked concerns for a potentially catastrophic debt default in China, as well as upcoming investigations from the United States.
Evergrande, a Chinese real-estate giant, holds more than $305 billion in liabilities. This most recent crypto downturn is being associated with a massive market sell-off, with holders attempting to raise their liquidity (i.e. monetary value that hasn’t been locked in) in response to a sharp decline in Evergrande’s share price, which just plunged to its lowest level in 11 years.
Adding to the market’s instabilities are this weekend’s reports that U.S. regulators are gearing up to probe crypto trading giant Binance to root out money laundering and other illicit activity.
Bitcoin itself dropped as much as 11% in less than 24 hours, while Ethereum fared even worse, plummeting as much as 13% in the same period. The altcoin market was unsurprisingly hit the hardest, with Algorand, which came out of a month-long 115% rally, losing as much as 22%. Other altcoins generally followed the market, which has slightly recovered since the initial drop, with Bitcoin currently being 8% down from yesterday’s high.
A selling market for some typically translates to a buyers’ market for others, however. El Salvador, which recently announced the acceptance of Bitcoin as legal tender, took the market downturn as an opportunity to add to its Bitcoin holdings, with the country announcing the acquisition of 150 bitcoins, valued at $6.5 million.
Cryptocurrency volatility is hardly a secret – and is actually one of the reasons for its usage as a speculation vehicle. While this market downturn in not nearly as dramatic as a Banksy-inspired, Pi-based, stock market-linked money shredder, cryptocurrency “hodlers” may certainly be feeling that way at this point in time.