Ethereum Plummets 22% as Cryptocurrency Market Cap Dips Below $2 Trillion

Ethereum experienced a significant drop of over 20% on Monday morning, a victim of the overall downturn in the crypto market, potentially influenced by concerns about a looming global economic downturn.

As Asian financial markets awoke to a sea of red on Monday, ETH tumbled by around 22%, falling from nearly $3,000 to $2,280 at the time of reporting.

However, the impact of Monday’s events was not limited to Ethereum alone. Various cryptocurrencies saw a substantial loss in value, resulting in a collective market value dip below $2 trillion, resting at approximately $1.89 trillion according to CoinGecko. This marks the first time this figure has dropped below $2 trillion since the beginning of the recent crypto bull market earlier this year.

Gracy Chen, CEO of Bitget, pointed to broader global economic factors as the main drivers behind ETH’s decline. Factors such as signals of a potential recession in the United States and Japan’s recent interest rate hike have contributed to the downturn.

Despite Ethereum’s decentralized nature, Chen noted that the token’s performance is closely intertwined with the overall market conditions. ETH is often viewed as an indicator of the general market sentiment, similar to Bitcoin.

In a parallel development, Bitcoin also fell below the $50,000 mark on Monday, leading to over $1 billion in liquidations of crypto-related positions within the last 24 hours, alongside Ethereum’s drop.

While some analysts attribute Ethereum’s decline to the same factors that impacted Asian stock markets, others suggest that specific crypto-related events, such as significant institutional sell-offs of ETH, have played a role in the market turmoil.

QCP Capital, based in Singapore, acknowledged the broader economic landscape’s influence on the crypto market downturn. They also highlighted large-scale institutional selling of ETH by trading firms like Jump Trading and Paradigm VC as contributing factors to Ethereum’s performance.

These unusual trades are seen as part of the broader global economic and political uncertainties that have unsettled traders in recent days.