Crypto investors have been lulled into a false sense of security after a steady three weeks, but now the cryptocurrency has plunged again.
A major cryptocurrency crash erased gains made over the past three weeks, sending digital token values to dangerously low levels.
Crypto prices fell Monday evening, with the most popular ones dropping 13%.
In total, the cryptocurrency market cap fell 8% from US$2 trillion (AU$2.7 billion) to US$1.84 trillion (AU$2.5 billion) .
This represents a staggering loss of US$160 billion. (215 billion Australian dollars).
Terra’s LUNA coin has slipped the most among the top 10 crypto tokens, plunging 13% in the past 24 hours and 28% in the past week.
Avalanche fell 12.6%, Solana 13% and Cardano 12%.
Bitcoin and Ethereum, the two most valuable crypto tokens, also suffered serious blows.
Ethereum was down 9.7%, to just US$2,989.
Bitcoin also fell massively, down 8% to a 24-hour low of US$39,275.80.
As of this writing, both coins are still on the downside.
Over the past three weeks, cryptocurrency has remained flat, especially bitcoin, so the latest drop has sent shockwaves through the industry.
BTC’s price peaked for the year at $48,200 on March 28, but now, weeks later, it’s tragic again.
Analysts believe crypto investors are spooked as markets around the world run out of steam.
In Asia, the Hang Seng closed down 3% on the day in Hong Kong, while the Shanghai Composite Index ended down 2.6%.
The German DAX was trading 0.77% in the red at the time of writing, as was the London stock market.
Australia’s ASX is expected to dive at its open this morning.
Tony Sycamore, Principal Market Analyst at City Index, said in a note to news.com.au: “Bitcoin crashed to trade at $39,446 (-6.36%) in line with the sharp decline in US stocks.
“As we continue to note, Bitcoin is a risky asset, closely tied to the performance of US equities and, in particular, the Nasdaq.
“Both benefited from a long period of ultra-loose monetary policy and excessive liquidity, which is now being hastily removed.”
Another explanation for the drop could be new bans imposed on cryptocurrency as Russia continues to try to evade economic sanctions amid its illegal invasion of Ukraine.
Just before the weekend, the European Union banned the use of cryptocurrency services to Russia.
The new rule blocks deposits to Russian crypto wallets, including popular cryptocurrencies like bitcoin, ethereum, BNB, XRP, cardano, solana, and luna.
It came after European Central Bank President Christine Lagarde warned that cryptocurrencies posed a “threat” to efforts to rein in Russia’s economy.
The EU will put “a ban on supplying high-value crypto-asset services to Russia,” the European Commission announced.
They added: “this will help fill in any potential gaps.”
The Indian cryptocurrency industry could also drag the overall market down.
Crypto research firm Crebaco found that trading volumes have dropped significantly in the country since a new tax rule was introduced on April 1.
India now requires a 30% tax on all profits generated from cryptocurrency transactions and does not allow gains to be offset against losses, according to CoinDesk.