Why Bitcoin, Ethereum, and Other Cryptocurrencies Suddenly Crashed Friday Afternoon

What happened

A massive sell-off on Friday in the cryptocurrency market accelerated after the stock market closed on Wall Street. The selling seems to be feeding on itself, causing panic across the market.

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Altcoins are down big today with some trading more than 30% lower, but the drops in giants like Bitcoin (CRYPTO:BTC) and Ethereum (CRYPTO:ETH) are staggering. As of 5:45 p.m. ET, Bitcoin is down 10.8% in the last 24 hours and 5.4% in just the last hour and a half to $35,724. Ethereum is down 16.8% in the last day and 6.9% in the last 90 minutes to $2,512.

Cardano (CRYPTO:ADA) has also tumbled 13.4% in the last 24 hours while Solana (CRYPTO:SOL) is down a whopping 19.1%. Down the altcoin list, there’s rapid selling heading into the weekend.

Image source: Getty Images.

So what

There are a couple of things to look at in short-term trading. One is that liquidations are accelerating as investors with leveraged bets that crypto prices would rise are liquidated from those positions. According to coinglass.com, $1.14 billion in crypto positions have been liquidated in the last 24 hours and $416 million of that batch came in just the last four hours. This is happening across the industry, but Ethereum is being hit hardest with $113 million in liquidations in the last four hours.

As this is happening, gas fees are soaring, especially on the Ethereum blockchain. Gas is the price you pay validators to complete transactions, and the price of gas goes up when the blockchain is congested.

Yesterday at this time, the price of gas in Ethereum was 203.7 GWei and right now it’s spiking over 550 GWei. At this time of day, it’s not unusual for gas fees to be close to 100 GWei, so there’s clearly a high level of activity, likely led by panic selling in the market.