The use of leverage can amplify the volatility of the markets.
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Over the weekend, the value of the cripto market fell by $400 billion.
The world's biggest coin was down 3.7% to $47,585 on the Coinbase exchange as of 5.35 a.m. The time is later.
Saturday saw the price of the digital currency plummet to as low as $42,000, before it rebounded to trade just below $50,000 for most of Sunday.
The token was roughly 30% below its November record high of close to $69,000 as of Monday.
The second-biggest token, ether, was down 6.4% on Monday. It crashed Saturday, falling as low as $3,570 before bouncing back.
The weekend plunge wiped $400 billion off of the global criptocurrency space, with the total market value of all token falling from over $2 trillion to under $2 trillion Monday.
Tech and meme stocks started tumbling Friday.
There are a lot of worries, including the new Omicron coronaviruses variant, rising chances that the Federal Reserve will tighten monetary policy, and mixed signals from the US economy.
The structure of the markets, where traders often use derivatives to bet on the direction of an asset without actually owning it, made the crash worse.
Many exchanges began liquidating traders' positions to make sure they had enough money on hand to cover losses as prices began to fall.
Sean Farrell, head of digital asset strategy at Fundstrat, said that on Friday, over $2 billion in long positions across the global market were wiped out.
Famed investor Louis Navellier warns that there are signs that a double top is imminent for the currency.
Solana, binance coin, and cardano were all lower Monday after slumping at the weekend.
Farrell said that there is reason to believe that the price of bitcoin consolidates around its current level before it heads higher.
The weekend crash did not affect the prices of the coins. Year-to-date, ether was more than 430% higher than the other, while the other was up around 62%.
The ride to be bumpy for cryptocurrencies in the coming months is expected by analysts.
"Cryptocurrencies have been propelled higher in this era of ultra- cheap money," said Streeter.
She said that they are likely to continue to be highly volatile as speculation swirls about when central banks will start raising interest rates.
Business Insider has an original article.
