The fall of crypto craze in 2024 : A year of reckoning
The cryptocurrency markets experienced a sharp downturn in 2024, causing a significant drop in the value of digital assets such as Bitcoin and Ethereum. Although the market was estimated to be $2.51 trillion in May, by August 6th, 2024, it had shed $367 billion in a single day, leaving a total of $1.95 trillion. This crash sent shockwaves across global markets, with major players like Bitcoin and Ethereum suffering double-digit losses, triggering widespread market unrest.
The cryptocurrency market fell in 2024 due to a combination of political risk factors, global market volatility, and changes in monetary policy. Leading cryptocurrencies like Bitcoin decreased by 17.37 percent within a week, while Ethereum faced an even worse situation, dropping by 26.53 percent. This collapse was largely attributed to investors pulling out of risky assets in response to global events and financial fluctuations.
Forbes reported a 13.13 percent decline in market volume over the past 24 hours, marking one of the biggest slumps since the FTX(Futures Exchange) failure in November 2022. Bitcoin’s price fell from over $60,000 to around $55,000, while Ethereum’s price reached a dismal $2,447.
This decline affected markets worldwide, spanning from the United States to Asia and Europe. Institutional investors, particularly in North America, saw their positions in cryptocurrencies devalued, while political and financial crises in Asia exacerbated the situation.
Japan’s market played a major role in triggering the crash. Sathvik Vishwanath, CEO of Unocoin, mentioned that Japan’s decision to raise interest rates for the first time in 17 years significantly affected the global market, including cryptocurrency.
The Bank of Japan’s monetary policy change led to a massive selloff, causing the yen to appreciate and prompting traders to exit riskier assets, including cryptocurrencies. The downturn escalated in the first week of August 2024, though it had been looming for some time. By June 6th, the market had already experienced one of its largest daily drops, shedding $367 billion in a single day. The crash was fueled by political tensions, particularly the escalating conflict between Israel and Iran, which disrupted global markets.
Both retail and institutional investors were hit hard by the crash. Retail investors, who had been drawn in by the prospect of high returns, suffered greatly as prices plummeted. Institutional investors also faced significant losses, as many had based their valuations on other market conditions, leading them to sell off their crypto holdings. Major cryptocurrencies like Bitcoin and Ethereum were not spared, while altcoins such as Cardano, Solana, Dogecoin, XRP, Shiba Inu, and BNB saw their values drop by over 20 percent.
Active traders on cryptocurrency exchanges like Coinbase and Binance initiated large-scale sell-offs. Some exchanges struggled to handle the high trading volumes, leading to delays and further panic among investors. The market briefly rebounded after the initial crash, with Bitcoin bouncing back slightly to trade around $56,000 after falling below $50,000. However, this recovery was short-lived, as ongoing economic challenges, investor sentiment, and geopolitical tensions continued to weigh on the market.
Japan experienced its worst single-day loss in the Nikkei Index since 1987, further destabilizing global markets. Although the Nikkei recovered by 10 percent the next day, offering some hope for broader market recovery, the long-term impact on the cryptocurrency market remained uncertain as traders questioned the sustainability of the rebound.
Several experts weighed in on the future of the cryptocurrency market. Himanshu Maradiya, Founder of CIFDAQ Blockchain Ecosystem, noted that short-term fluctuations in the price of digital currencies are common, but the inherent utility and benefits of cryptocurrencies remain unchanged. He believes that as macroeconomic conditions stabilize, the crypto market may return to strong growth.
On the other hand, Sathvik Vishwanath argued that the future of the crypto market this year would depend heavily on global stock exchanges. As governments and central banks become more involved, there is a risk that increased regulation could undermine the decentralized nature of cryptocurrency, potentially leading to market manipulation.
The cryptocurrency crash of 2024 will likely be remembered as one of the market’s most significant setbacks. While major cryptocurrencies like Bitcoin and Ethereum have been rapidly gaining value, they remain vulnerable to external factors such as policy changes and investor sentiment. The crash highlights the need for greater security and regulation in the digital currency market if it is to become a lasting force in the future financial landscape.
Despite the turmoil, many experts believe that the future of cryptocurrency remains bright, particularly with the continued development of blockchain technology. However, the events of 2024 should serve as a warning to potential investors about the risks of participating in an unpredictable and largely unregulated market.
