Bitcoin Crash, the worse fall in the past 7 years – 90 billion wipes out from the crypto market
On 12th March, the financial markets experienced a blood bath. With stocks, oil, gold drenched in red, most didn’t expect the crypto market to follow the bearish trail until what we state the worse fall in more than half a decade happened; Bitcoin collapsed 40% under 24-hours.
The market cap the crash wiped out $93.5 billion from the market cap under a day. Bitcoin reached the lowest its been in 2020 as it touched the $4000 mark.
The global sell-off on stocks made Dow Jones suffer its biggest drop since 1987’s Black Monday. The broad-based S&P 500 plunged 9.5% to 2,480.64, while the Nasdaq Composite Index dropped 9.4% to 7,201.80.
Amidst the Coronavirus panic, Trump declared a travel ban on most travel from Europe while failing to give a comprehensive economic and medical of the pandemic. As if the coronavirus panic wasn’t enough already, the travel ban induced it more.
Yesterday’s market sell-off worsened to a level that stock trading was put to a stop for 15 whole minutes as the market hit the mandatory “circuit-breaker” threshold set by the US. Nevertheless, even that couldn’t stop the plunge as the market was already infected with panic selling. Gold fell, oil dropped and the credit market along with crypto followed.
The increased selling pressure killed the buying momentum which further increased selling pressure and so on.
“Markets can remain irrational longer than you can remain solvent.”-John Maynard Keynes
The crashes were the result of an extended bull market plus a worldwide pandemic surrounded by paranoia.
To get this right, think about this – didn’t the bull market feel too long? Bitcoin stalling around $10k and altcoins pumping without any significant progress. There comes a point when irrational exuberance and greed drive the prices and the trading value becomes way more than its actual value.
This type of extended bull market was also observed in the traditional stock market. The financial market would have nevertheless faced a correction but now, the usual crash was accompanied by millions of panic sellers.
If you’ve ever read the Intelligent Investor by Benjamin Graham, the book that inspired Warren Buffet, you’ll understand a lot about the mentality of the market.
Amongst things that live and die one thing that remains constant is the mentality of the market. The market sells when prices drop and buy when prices rise. The basic investment strategy of buying low and selling high doesn’t work here for anyone who gets into the bull wave.
With Trump’s announcement, and Toilet paper prices skyrocketing, there were some market sell-offs. This lead to the eventual crash of an extended bull market. But that wasn’t it. The crash was followed by a huge number of panic selling, as the domino effect runs – all the financial markets collapsed.