After reaching an all-time high of more than $2.6 trillion about a week ago, the total value of cryptocurrencies collapsed Wednesday morning, vaporizing nearly $1 trillion.
The prices of Bitcoin, Ethereum, Dogecoin, and many other cryptocurrencies abruptly cascaded to lows not seen in more than a year. Prices recovered slightly to a cumulative $1.8 trillion by Thursday morning, per data from CoinGecko, a market tracker, but not before the previous day’s gyrations rattled investors everywhere.
Total market value of all cryptocurrencies since Jan. 1, 2020, per CoinGecko
The total value of all cryptocurrencies tanked by nearly $1 trillion on Wednesday, just a week after hitting an all-time high on May 12. (Screenshot of a CoinGecko chart.)
Market watchers attributed the sell-off to a perceived crackdown in China. In a joint statement on Tuesday, three Chinese self-regulatory groups in the financial industry told their members they can’t do business with cryptocurrency companies—meaning no banking, payments, trading, and more. The circular largely reiterated the anti-crypto stance staked out by the country’s regulators in 2017, but it seemed to trigger newfound fears that the industry could be further curbed there. (China’s government has not forbidden people from holding cryptocurrencies.)
Bitcoin alone lost more than half its value in the span of about a month. After reaching an all-time high of $64,800 on April 14, the cryptocurrency’s price per coin skidded to $30,400 on Wednesday morning, a loss of 53%.
Bitcoin’s plunge into a valley of despair lasted only temporarily. The price recovered to more than $40,000 per Bitcoin by Thursday morning, down about 38% from its highest ever peak last month. The price is still quadruple the $10,000 price of a single Bitcoin one year ago.
Bitcoin’s 24-hour price fluctuations, per CoinGecko
Bitcoin fleetingly bottomed out near $30,000 on Wednesday, a price still triple the value of one Bitcoin year-over-year. (Screenshot of a CoinGecko chart.)
Other cryptocurrencies were caught in Wednesday’s wreckage.
Ethereum, the world’s second-most valuable cryptocurrency, bombed by more than half to $2,050 per Ether, as its cryptocurrency is called, from an all-time high of $4,360 on May 12. The digital coin was trading at $2,750 by Thursday morning, down, like Bitcoin, 38% from its recent highest-ever peak, but up more than 1,200% from a year ago.
Like the rest of the market, Dogecoin took damage. The jokey, meme-inspired cryptocurrency—which has recently attracted a rabid following that counts billionaire superfan Elon Musk—plunged to $0.25 per Dogecoin on Wednesday, a two-thirds drop from its peak of $0.73 per Dogecoin on May 8. The price recovered to $0.40 per Dogecoin by Thursday morning, half its recent highest-ever price, but still up a breathtaking 15,500% from a year ago.
The following chart, sourced from Coindesk data, shows how well some of the world’s biggest cryptocurrencies fared in recent weeks. The lines show the price action of digital assets—including Litecoin, XRP, and Cardano—as measured from the date of Bitcoin’s all-time high on April 14, to Wednesday’s white-knuckled lows.
Most of the digital assets roughly halved at Wednesday’s worst, before rebounding considerably by Thursday morning.
Cryptocurrencies have a history of stomach-churning volatility, which can leave some investors feeling uneasy with reminiscences of ears-long major market drawdowns. Some investors no doubt took money off the table on Wednesday, selling holdings for a profit, while others sensed a buying opportunity and bought more. Yet others followed the gospel of HODL: a crypto-catchphrase meaning “hold.”
How far we may be from the bottom—or top—is anyone’s guess. But there’s bound to be plenty more ups and downs along the way.
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