In just six weeks, $1.2 trillion has "evaporated" from the crypto market.

The cryptocurrency market is undergoing a dramatic correction, with total market capitalization plunging by more than $1.2 trillion over the past six weeks. This round of selling began due to concerns about overvaluation of technology stocks and the direction of U.S. interest rate policy. Bitcoin’s price has fallen more than 28% from its October 6 peak, hitting its lowest level since April and erasing all yearly gains. According to data provider CoinGecko, the total market capitalization of more than 18,000 digital currencies fell by 25% during this period.

New doubts about whether the Federal Reserve will cut interest rates in December have heightened market anxiety. Lower interest rates typically boost the appeal of crypto tokens and other risky assets, as they decrease the returns investors receive from holding short-term U.S. government bonds. Astronaut Capital Chief Investment Officer Matthew Dibb warned that, amid pessimistic sentiment, $75,000 for Bitcoin may not be far away: > Sentiment in the cryptocurrency market is quite low, and has stayed that way since the leverage crash in October. > The next support level is $75,000. If market volatility remains high, it’s possible to reach that level. ## Leverage Liquidations Trigger a Chain Reaction The market crash on October 10 marked a turning point in this decline. According to trading platform Coinbase, $20 billion in leveraged positions in digital currencies were liquidated on that day, the largest single-day liquidation on record. Bitwise Asset Management Research Director Ryan Rasmussen said: > Cryptocurrency investors love leverage; > Time and again, we see traders taking excessive risks, thinking this time will be different. CEA Industries CEO David Namdar described current market conditions as "aftershocks of the October liquidation event": > This round of selling is different in scale because the positions are larger, the leverage is deeper, and closing out positions takes longer. ## Small Coins Take a Hard Hit Higher-risk small-cap tokens have suffered the heaviest losses. The MarketVector Digital Assets 100 Small Cap Index has fallen to its lowest level since November 2020, showing investor risk appetite for speculative assets has dramatically decreased. Of the top 20 cryptocurrencies by market capitalization, 6 have declined by more than 40% this year; Dogecoin, Sui, and Avalanche have each fallen by around 50%. Over the past five years, the small-cap index dropped by nearly 8%, while the large-cap index soared by about 380%.

Apollo Crypto portfolio manager Pratik Kala said: > A rising tide doesn’t lift all boats, only quality ones.   Risk Notice and Disclaimer The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the particular investment objectives, financial situation, or needs of any individual user. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. Any investment made based on this is at users’ own risk.