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Crypto lunch: price Bitcoin and crypto crashes: 4 causes, damage and now?

As usual, around lunchtime we look at the live Bitcoin price and the prices of the top 25 crypto. When we do this we see that another cryptocurrency crash is underway. We name the causes, take stock of the damage and ask: what next?

We start with the live Bitcoin price and the prices of the top 25 crypto.

Live Bitcoin price and prices top 25 crypto down in next cryptocurrency crash

At the time of writing, the live Bitcoin price is EUR 34,338.89 ($38,858.79)… This is 7.96% lower than during our crypto lunch yesterday.

The prices of the top 25 crypto are also crashing. Apart from a few stable coins, we only see red numbers. The most loss is for Near (NEAR), which loses 13.75% in 24 hours. However, in the overview of live crypto prices on Tradeincrypto.com, we see that more crypto coins are writing losses in double digits.

Why is crypto crashing today? 4 causes

We already saw last night that the crypto market was plagued by bad news. In doing so, we see 4 other causes that may explain the fall in crypto prices.

Crypto currencies down due to correlation with equity markets

First of all, we see that correlation with the stock market is again playing tricks on crypto. The S&P500 and NASDAQ fell both in spot price and in the derivatives markets.

Selling intentions effected

In addition, we see that a lot of crypto and especially a lot of Bitcoin was transferred to exchanges. So it seems that there was already a selling intention.

Bitcoin weekly options in favor of puts

This selling intent probably has to do with the crypto derivatives market. Indeed, we see that the weekly options that expired today had the largest open interest at $39,000. This seems to explain the market’s move towards this price. Here you can see the entire analysis with accompanying charts.

The crypto snowball is rolling again

As we often see with sharp price drops of crypto currencies, the crypto snowball has started rolling again. Our colleagues at Tradeincrypto.com explained earlier what a crypto snowball is. That it rolls we see when we look at the damage from the latest price drop.

This is the damage from the crypto crash

As we can see, a crypto snowball leads to liquidation of crypto investors’ positions and sales by automatic orders. Until the time of writing, we see the following impact of these two factors….

Crypto exchanges liquidate $715 million collateral

The mandatory foreclosures of crypto portfolios affected 185,480 investors so far. They collectively lost $715 million. The hardest hit fell on Bitmex, where the largest portfolio was liquidated. This led to a loss of $9.91 million. The hardest hit exchange was Binance, where $173 million was liquidated. Okex remained right behind it with $170 million in losses.

(Automatic) orders cause $1.3 billion outflow

If we look at the entire market capitalization of the crypto market we see that it fell below $2 trillion for the first time since the end of September. In the last 12 hours some $233 billion flowed out of the market. The exact percentage of the number of orders that were automatically processed cannot be determined, but the impact on the market is large.

What can we expect next?

Meanwhile, the positive analyses of Bitcoin and other crypto are proving to be a pipe dream for the time being. Still, technical factors continue to indicate that the bottom of the Bitcoin price is near. For example, Bloomberg shared this statistic this morning.

Twitter won’t load because you didn’t give permission.

This price chart suggests Bitcoin may be nearing a bottom https://t.co/5boUcwnhzq

– Bloomberg (@business) January 21, 2022

However, we see that the price declines have not yet stopped. Therefore, the market remains uncertain and most likely bearish until calm returns. Then, with the figures at that time, there is again more to analyze. Perhaps that possibility arises tonight when the U.S. markets are closed.

Want to stay up to date with the latest stock price developments?

You can always follow the developments yourself with our WANT crypto analyses or the background articles and previews on the crypto market and Bitcoin. Of course, you can also follow the live quotes 24 hours a day if you want to stay informed in real time. Are you interested in other investments besides crypto? Then our weekly price forecast might be a reading tip.

Note: We never give financial advice, so our contributions should not be interpreted as such. Always do your own research and decide rationally if, when, what and how much you want to invest in.