Ethereum, the second biggest digital coin, was hardest hit among the major cryptocurrencies. It has lost more than 20 per cent in the last 24 hours, with its price dropping below the $2,000 mark that is held as a milestone.
But ethereum was far from alone in suffering bad fortunes. Bitcoin has dropped 12.5 per cent over the last 24 hours, taking it to $26,653 – well below the $30,000 mark that was seen as an important psychological support.
Those difficulties have led the market to drop almost 17 per cent in the last 24 hours – after an already negative few days.
And smaller coins have suffered even more drops in price. Part of the current panic in crypto markets is the result of the dramatic crash of the Terra (LUNA) cryptocurrency, which has lost almost all of its value in a dramatic crash.
Terra (LUNA) is a so-called stablecoin, with its value intended to be pegged to the dollar, though it is now trading far below where it is intended. As such, its drop has caused worries across the market.
While the worst of those fears are yet to come true, the panic about cryptocurrencies appeared to drag the market down generally.
Cryptocurrency’s problems came amid difficult times for technology stocks, many of which lost even more value. Apple has lost almost 11 per cent in the last five days, for instance – losing it its crown as the most valuable company in the world.
That selloff was partly the result of increased worries about inflation. Bitcoin’s proponents have long said that it could work as a hedge against any inflation, as a kind of digital gold, but cryptocurrency appears to have been hit by the same worries.
Analsyts suggested that some of those investors who had moved into cryptocurrency over recent months, in an attempt to get returns in an environment of low interest rates, were now moving back to more traditional assets in a search for safety.