The cryptocurrency market suffered massive losses on Tuesday. A wave of selling slashed the values of almost every coin, undoing the gains that had been factored in by a retail trading frenzy ahead of El Salvador’s first day of recognizing bitcoin as legal money.
By noon on Tuesday, the value of the world’s cryptocurrencies had plummeted to over $1.9 trillion, down nearly 15% from the previous day and representing a loss of more than $410 billion.
The sharp drop occurred less than a day after JPMorgan analysts warned that recent increases in altcoins reflected “froth and retail investor mania” rather than long-term market gains.
During the flash crash, El Salvadoran President Nayib Bukele said that the country had taken advantage of falling prices to buy another 150 bitcoins, bringing its total holdings to 550 coins worth around $25 million. Unfortunately, El Salvador’s wallet ran into technical issues just hours after its launch, prompting President Bukele to announce that it will be taken down for the time being.
Then, increased trading activity prompted rumors that institutions were dumping massive positions, resulting in temporary outages and trade delays on many of the world’s top cryptocurrency exchanges, including Coinbase, Kraken, and Gemini.
If you’re new to cryptocurrency investing, the flash crash probably shook you to the core. But for experienced crypto investors, this was likely just another day at the office.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.