The day started off positively for crypto enthusiasts, but fortunes quickly changed. A rapid increase in Bitcoin 
$63,502‘s price brought it close to six-figure levels, yet this surge was short-lived. The situation worsened dramatically when it was revealed that $1.4 billion worth of Ether and derivatives were stolen from ByBit’s cold wallet, further exacerbated by a second reason for the decline.
What Caused the Crypto Drop?
The correlation with the SP500, which had previously dropped to zero, turned positive again alongside stock market declines. The price of BTC fell in tandem with the US markets. The initial cause of the crypto downturn was the billion-dollar hack at ByBit exchange. Additionally, negative comments regarding tariffs and the pessimistic outlook from Fed officials contributed to the negative sentiment.
Another significant reason for the decline is the emergence of a second wave of virus reports in China, raising global pandemic concerns. However, this situation may not be as alarming, as Lark Davis noted;
“Covid fears in China are reported. The virus has only been found in animals. It is thought to resemble MERS with a 1 in 3 mortality rate. Most importantly, there has been no transmission from animals to humans. Although theoretically possible, this has not been proven. No one is sick. The findings were published in a scientific journal, not as a red alarm from Beijing.”
A report published in the journal Cell indicates a new variant of the HKU5 coronavirus, suggesting that any panic may soon pass.
Why Did the Drop Accelerate?
In futures trading, $2.5 billion in open positions were liquidated. Not only are long and short positions being closed, but there is also a noticeable trend of positions being directly exited. Traders attempting to withdraw their balances appear to have intensified this decline, causing BTC to drop to $95,400.
Turkish on-chain analyst Anlcnc1 stated;
“If you ask whether the price is falling and being shorted, it seems both long and short positions continue to close. I’m not sure, but positions are likely being closed; balances will be withdrawn.
On the Ether side, a total of $1.4 billion in open positions were liquidated, with $680 million of that from Bybit.”
BTC stands at $95,500.
