Crypto market crash wipes out billions in dramatic single-day plunge
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The crypto market was rocked by a dramatic plunge Saturday, marking one of the sharpest single-day drops in recent history and wiping out billions in value, one expert told FOX Business.
The sudden collapse followed the U.S. government’s announcement of new tariffs on Chinese tech imports, a move that rattled investors and triggered panic.
Joshua Duckett, director of investigations at a crypto forensic firm, said traders had been forced to liquidate positions, sending prices into free fall.
“Most people don’t invest more than they can lose, but in the crypto industry as a whole, in terms of leveraged trading, it’s in the billions,” Duckett explained.
A neon sign indicates that Bitcoin is accepted inside the venue of the Paralelni Polis project, an organization combining art, social sciences and modern technology, in Prague, Czech Republic. (Milan Jaros/Bloomberg via Getty Images / Getty Images)
“The amounts that people have lost are varying. Some people lost hundreds, thousands, millions, the total in terms of liquidations extends into the billions.”
Bitcoin, the largest cryptocurrency, fell below $110,000, while Ethereum and other major tokens lost more than 20% of their value within hours.
Traders who had borrowed heavily to bet on rising prices were caught off guard, triggering a wave of forced liquidations that accelerated the crash.
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Traders work during the opening bell at the New York Stock Exchange. (Johannes Eisele/AFP via Getty Images / Getty Images)
“The crypto market reacted in a more extreme way than the stock market because it’s 24/7.” Duckett said. “You’ll see the stock market react in a bad way. The crypto market reacted in a more extreme way.”
“There was a market downturn in terms of multiple cryptocurrencies that have dropped in value over the past 24 hours, primarily due to market news, as well as the effects of said news on people that are trading in the crypto markets,” explained Duckett.
Leverage, he said, the practice of borrowing to increase exposure, was a key driver of the losses.
“People can borrow against what they have and leverage up to extreme amounts, 100x essentially in crypto, which is a pretty large amount,” Duckett noted.
“And so when those positions are liquidated, a large move either to the upside or the downside happens. In this case, the downside.”
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The number of people worldwide that own at least $1 million worth of cryptocurrency has soared over the past year. (iStock / iStock)
The sudden unwinding of these leveraged trades caused a chain reaction. “This caused a spiral of cascading liquidations, essentially,”…
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