Cryptocurrency Crash...Global Market Cap Vanishes by 1,300 Trillion Won in Just 6 Months

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] As concerns over risky assets grow, the global cryptocurrency market capitalization has evaporated by more than $1 trillion (approximately 1,284 trillion KRW) in just six months, reported The Wall Street Journal (WSJ) on the 13th (local time).

According to the report, Bitcoin and Ethereum reached all-time highs of $67,802.30 and $4,800 respectively in November last year, but have since fallen by 58% and 60%.

Cryptocurrencies gained popularity last year as Tesla purchased $1.5 billion worth of Bitcoin and the exchange Coinbase was listed on the New York Stock Exchange. In particular, major coins including Bitcoin were mentioned as a hedge against inflation.

However, WSJ reported that the recent downturn is even unsettling seasoned investors. Not only did some stablecoins, including Luna, unexpectedly crash, but the leading Bitcoin has also continued a seven-day consecutive decline.

This is interpreted as a result of investors massively selling off risky assets at a turning point in the financial market, where inflation is intensifying and major countries are raising interest rates. WSJ conveyed the atmosphere, stating, "Soaring inflation is prompting the Federal Reserve (Fed) to raise interest rates more quickly," and "Investors see this as slowing economic growth and are removing risky assets, including cryptocurrencies, from their portfolios."

Additionally, the involvement of major investment banks and hedge funds in cryptocurrency investments is also analyzed as a factor that worsened losses during the downturn.

Coinbase announced a decrease in users in the first quarter. The company's stock price has plummeted 82% compared to just after its listing last year. The weekly decline rates for Bitcoin and Ethereum this week are expected to be 15% and 22%, respectively, marking the worst week since May last year.

Meanwhile, major global cryptocurrency exchanges such as OKX and FTX are suspending trading and delisting the Korean coins Luna and TerraUSD (UST), which recently crashed. Bloomberg reported that Coinbase, the largest cryptocurrency exchange in the U.S., will suspend trading starting on the 27th.