Crypto Flash Crash Sees Coin Values Plunge by $16 Billion; Tether Overtakes Bitcoin as Volume Leader

A fresh bout of profit-taking swept the crypto markets on Sunday, leading to a dramatic plunge in prices for bitcoin and the major altcoins. The sudden reversal came on the heels of a large rally on Saturday that had all the characteristics of a bearish-to-bullish reversal change.

Coins Plunge

After a promising start to the weekend, crypto markets sold off anew in the early hours of Sunday. Bitcoin (BTC) fell 5.4% to $3,822.47, according to CoinMarketCap. The leading digital currency traded as high as $4,282.40 on Bitfinex prior to the ensuing drop.

Percentage-wise, bitcoin’s losses were minor in comparison to some of its altcoin peers. Litecoin (LTC), a major trend setter of late, plunged 11.5% to $44.14. Bitcoin cash (BCH) reversed 10.1% to $130.60.

Ethereum (ETH), XRP (XRP) and EOS (EOS) all fell between 6.9% and 9.3%.

Further down the market cap index, Stellar (XLM), Tron (TRX) and Binance Coin (BNB) each declined by at least 7%.

With the exception of the dollar-backed stablecoins, all of the top 40 coins were in the red.

There was no immediate catalyst for the sudden reversal, which is a clear indication that profit-taking was in play. The cryptocurrency market cap peaked at $143.5 billion overnight, which was the highest in over three months. It has since come crashing back down to $127.6 billion, where it was on track to reverse some of last week’s gains.

Cryptocurrencies are coming off an impressive week of gains. Read about it in our Week in Review: Crypto Spring? Bitcoin on Track to Snap Six-Month Losing Streak Following Spectacular Week.

Volumes Surge and Tether’s Dominance

Exchange-based trade volumes have eclipsed $40 billion for the first time since April 2018. Tether (USDT), the popular stablecoin, overtook bitcoin as the volume leader on Sunday. Roughly a third (29.6%) of the daily volume on Sunday can be attributed to USDT trades compared to 27.9% for bitcoin. In dollar terms, that’s equivalent to $11.6 billion for USDT and $10.9 billion for bitcoin. Volume-wise, that marks the busiest day in Tether’s short history.

Investors often park their funds into USDT as a way to keep their portfolio more stable and to avoid volatile swings like we’re witnessing now.

USDT experienced a similar rise in activity last week. Read more: Busiest Day in Tether’s History as USDT Volume Matches Bitcoin’s $10 Billion.

While higher than normal volumes have been observed for the better part of two months, it wasn’t until the first week of February that it began translating into higher volatility. Bitcoin’s volatility index, which tracks the commodity’s price variance over the past 30 days, has reversed its slide in recent weeks. It peaked at 2.80% on Feb. 8 before declining again. Since falling below 2.00%, it has returned to the 2.2% range, according to bitvol.info.

Litecoin’s volatility readings follow a similar trajectory, though the extent of the price variance is much higher. As of Saturday, Litecoin’s 30-day volatility index was 6.15%.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi