The cryptocurrency markets are full of ups and downs – but perhaps there hasn't been a day in history quite like today.
Just hours after bitcoin set a new all-time high, it fell more than $400 in a matter of hours – but, it wasn't alone in seeing its direction dip into the red. Several other cryptocurrencies followed bitcoin lower, suffering notable losses, according to CoinMarketCap.
What caused these sharp declines? Profit taking, according to analysts polled by CoinDesk.
After robust inflows pushed the total market capitalization of all cryptocurrencies above $90bn (a monthly increase of roughly 200%), traders were simply taking money off the table.
After experiencing this notable rally, many cryptocurrencies started losing value, a development that coincided with the price of bitcoin falling more than 15% in a matter of hours, CoinDesk Bitcoin Price Index (BPI) data reveals.
Several other top 10 cryptocurrencies also suffered losses of more than 10%, according to CoinMarketCap.
"[Traders] took this opportunity to capitalize on the excessive hype that's been building up over the past few days in the space," said Petar Zivkovski, COO of leveraged cryptocurrency trading platform Whaleclub.
While traders were seeking safety, their anxiety also helped fuel the broad drop in cryptocurrency prices, according to Charles Hayter, co-founder and CEO of CryptoCompare. These market participants felt "jittery" after the recent gains, he told CoinDesk.
Even though bitcoin prices did fall notably during the session, some analysts described this decline as "healthy".
Tim Enneking, chairman of Crypto Asset Management, expressed positive sentiment regarding the fallback in prices, concluding:
"Bitcoin had moved too far too fast. This is a healthy, call it a 'correction', coming on the heels of a very strong move it."
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