Crypto's Covid Crash Still 5X Worse Than 2024 Sell-Offs

Crypto's Covid Crash Still 5X Worse Than 2024 Sell-OffsThe cryptocurrency market has been experiencing a tumultuous period, with significant sell-offs and price drops. However, recent events have highlighted that the current market downturns are relatively mild compared to the devastating Covid-19 crash of 2020. According to CoinGecko, the Covid-19 crash remains the benchmark for severe downturns, with a market correction of -39.6% on March 13, 2020, which is five times worse than the largest sell-offs in 2024.The most recent market downturn saw a loss of approximately $367 billion in a single day, with Bitcoin and Ether experiencing substantial declines. Bitcoin plummeted by 15% in the last 24 hours, while Ether saw a staggering 22% decrease. This price drop resulted in over $1.13 billion in liquidations within the derivatives markets, as reported by Coinglass.The current market instability is not limited to cryptocurrencies. The broader equity markets have also been affected, with the Nasdaq index in the U.S. experiencing its worst three-week performance in two years. The Nikkei 225 index in Japan fell by more than 12%, marking its most significant decline since the infamous 'Black Monday' crash of 1987.The recent drop in stock prices was partly due to underwhelming earnings reports, a weaker-than-anticipated jobs report, rising unemployment, and a contracting manufacturing sector. The U.S. Federal Reserve decided to maintain its benchmark interest rate, refraining from promising a rate cut in September, which many analysts had anticipated. Generally, lower interest rates are associated with improved performance for riskier assets.Despite the recent market downturns, the crypto market has shown resilience in 2024. The largest crypto market sell-off this year was a relatively mild -8.4% on March 20, 2024. In contrast, the Covid-19 crash saw a total crypto market capitalization plummet by -39.6% day-over-day, from $223.74 billion to $135.14 billion.Bitcoin experienced its biggest price correction of -35.2% on the same day, while Ethereum saw its second-largest drop at -43.1%. The crypto market has not recorded a single day of correction since the FTX collapse in November 2022. Over the past ten years, the longest crypto corrections have lasted at most two consecutive days, occurring only three times. From 2014 to date, the global crypto market has experienced 62 days of market correction, representing just 1.6% of the time during this period, with the average crypto market correction being 13%.Notably, 2023 saw zero days of correction for the overall crypto market, Bitcoin, and Ethereum. While the global crypto market and Bitcoin have avoided corrections in 2024 so far, Ethereum has experienced two days of price correction this year: -10.1% on March 20 and -10% on August 6, 2024.Investors are keeping an eye on upcoming trade data from China and Taiwan this week, along with decisions from central banks in India and Australia. The recent cryptocurrency market collapse will likely impact a wider range of investors, especially after the SEC approved new spot exchange-traded funds (ETFs) for Bitcoin and Ether earlier this year. These ETFs have attracted hundreds of millions of dollars into these cryptocurrencies.On Friday, CNBC reported that Morgan Stanley is poised to allow its 15,000 financial advisors to offer Bitcoin ETFs to their clients, marking a significant first for Wall Street.