The market cap of cryptocurrencies plummeted by $100 billion in just three hours. Consequently, the cumulative value of cryptocurrencies nosedived from $1.82 trillion to $1.72 trillion, sending shockwaves through the market.

Bitcoin and Ethereum Lead the Downward Spiral

Notably, Bitcoin saw a significant 6% drop, trading at $42,600. This decline followed its peak at $45,900, marking the highest value since April 2022. Ethereum mirrored this trend, also declining by 6%.

Moreover, trader Scott Melker points to excessive leverage as the culprit for the abrupt downturn. “Open interest was sky-high, with funding rates soaring to 66% annually,” Melker observed. “The market just saw $500 million in liquidations, predominantly long positions, within an hour.”

Additionally, over half of the top 100 digital currencies experienced double-digit losses. BONK, for instance, retreated by 18.6% over 24 hours, highlighting the widespread impact of this market crash.

Significantly, this flash crash serves as a reminder of the inherent risks in cryptocurrency trading. Investors and traders are now grappling with the consequences, underscoring the need for caution in this highly speculative market.

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