Why the Crypto Market Shed 8% of its Value in Under 24 Hours on January 6, 2022

According to CoinGecko, the total market capitalisation as of January 6, 2022 is $2.18 trillion, declining almost 200 billion from $2.33 trilllion within just 24hrs.

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The market capitalisation for crypto tokens has declined by 8.42% within the last 24 hours.

According to CoinGecko, the total market capitalization as of January 6, 2022 is $2.18 trilion, declining almost 200 billion from $2.33 trilllion within just 24hrs.

Individual tokens reflect the drastic downturn as:

  • BTC lost 7.7% of its market cap
  • ETH declined by 10.5%
  • BNB has declined by 9.2%
  • Solana by 12.5%
  • ADA dropped by 8.8%.

Current prices of the leading tokens:

  • BTC – $42,952.00
  • ETH – $3,357.02
  • BNB – $463.03
  • SOL – $147.54
  • ADA – $1.21

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SEE ALSOCould ETH Really Flip Bitcoin’s Market Cap?

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What Caused the Decline

On Wednesday 5th 2022, minutes of the Federal Reserve Bank December 2022 meeting were published, with indications that they might raise rates as early as March 2022. This spooked markets since analysts had thought the hikes were more likely in May or June 2022.

Following the news, stocks registered significant decline. Major stock indices represented the downturn as the Nasdaq was reported to have plunged more than 3% and S&P 500 fell by 1%.

The rate hikes by the U.S apex bank is meant to cushion rising inflation. However, raising interest rates dampens market sentiment since it makes it more expensive for businesses and consumers to borrow.

In 2021, cryptocurrencies price movement became closely linked to the stock markets.

According to Bloomberg, as of December 3, 2021, the 100-day correlation coefficient between bitcoin and the S&P 500 was 0.33, where 1 means they always move together and -1 means they are completely divergent.

Extreme Fear

Bitcoin’s Fear and Greed Index has adjusted to reflect the current mood in the markets.

Other reports have pointed to widespread internet outages in Kazakhstan as a contributing reason for the price drop as that country is responsible for the second-largest rates of Bitcoin mining after the U.S. 

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RECOMMENDED READING: Why Did Crypto Markets Plummet on Saturday, December 4, 2021?

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