Global markets were sent reeling this weekend, and crypto was no different. The total crypto market cap was down around US$400 billion, while Bitcoin had more than US$1 billion knocked off its market cap and was trading below the US$50,000 price mark for the first time since early October, according to CoinMarketCap. 

This marks the second weekend in a row that crypto markets have been hit hard by external shocks; last weekend the discovery of the new Omicron variant of the coronavirus sent the market down roughly 10%, though it did recover coming into the business week. This time the drop-off has been much more significant, and it has not been met with a similar price recovery coming into the business week.

While a single reason for the downturn has been difficult to pinpoint, experts told Forkast.News a confluence of factors could be at play: ongoing uncertainty about the future of embattled Chinese property giant Evergrande could have contributed, as it announced on Friday that it may be facing a restructuring as it plans to “actively engage” with offshore creditors to manage its mounting debt woes, but that’s not all.

“The jobs numbers out of the U.S. was disappointing,” said Andrew Sullivan, founder and writer for, telling Forkast.News the recent jobs report from the U.S. could also have affected the global downturn. “The headline number was bad, but also some of the detail numbers were throwing up anomalies, that’s something that markets don’t like. If it’s a broad trend, then everybody is quite happy because you can understand that. But if it’s certain sectors doing this and not other sectors, then what are we missing? What aren’t we seeing?”

Sullivan also attributed some of the downturn to continuing fears of the Omicron variant, which has been confirmed to have spread to countries far beyond South Africa, where it was first detected. While the severity of symptoms attributed to Omicron so far appears to be less than earlier variants, there are concerns that its virality may be higher, and as Sullivan added, even how quickly the initial virus is mutating may be concerning enough alone for people.

“It just seemed to be a general mood of caution coming through, and it’s quite interesting because [the market] hasn’t really bounced back,” Sullivan added. “When we’ve seen these things in the past, there’s usually been quite a good bounce back, which suggests that a lot of it is involved with hedge funds or those sorts of people; they’re coming to the year-end, they’ve done very well out of it, so you might as well lock in the gains and not have to worry about the next couple of weeks, and then let’s start again in January.”

Looking across to Asian markets, while there were a few that managed to recover from the dip, many had not; markets like the Hang Seng and Nikkei were down, the latter has shown some signs of recovery coming into Asian business hours today, according to MarketWatch. Sullivan expects markets like Taiwan, whose economy is dominated by tech manufacturing and shipping, to actually do well in the event of increased Covid cases, while others in Asia may be adversely impacted by the U.S. Federal Reserve bringing forward its plans to tighten spending.

“If the Fed is going to tighten, the banks are going to do well,” Sullivan said. “So, for a lot of the sectors in Asia, there is good interest. The ones like Japan and Hong Kong that are down are the ones that are more linked in with e-commerce, where the risk of tightening probably hurts their valuations more than benefits them in any way.”

For others, available data did give hints that some bullish crypto price action may have been on the cards. Justin d’Anethan, head of exchange sales at EQONEX, told Forkast.News two different metrics caught his eye in the lead-up to the downturn. An increase in Bitcoin exchange reserves, as well as the Bitcoin leverage ratio across markets, occurred just before the price slump, according to data from CryptoQuant, indicating a sell-off was near.

“Whether it’s a reaction to several crypto ETF applications being withdrawn (BTC spot and for ETH) or ahead of something to come, whales in the crypto space seem to have transferred coins to trading venue, taken advantage of a bullish bias and leverage from retail traders, to then push prices down,” D’Anethan said in a written statement, before adding that it was not all doom and gloom for investors. “If anything, this is the opportunity to buy the dip for many investors who might have previously felt like they missed the boat.”

Bitcoin dropped more than 20% in a matter of hours at the beginning of the weekend, at one point trading just above US$45,000, and had recovered slightly to trade just at US$48,342  at press time.

The world’s second-largest token, Ethereum, didn’t fare much better, also losing over 20% to trade as low as US$3,632. Similar to Bitcoin it too made a slight recovery and was trading at US$4,076 at press time, according to data from CoinMarketCap.

The only major token to buck the trend was LUNA, the native token of the Terra network, which has been on a price tear over the past two weeks, even managing to reach a new all-time high during the weekend, recovering sharply after being hit by the initial shock of the sell-off to hit US$77.94. This strong price action has also meant the network, which also issues the algorithmic stablecoin UST, has overtaken Dogecoin in terms of market cap and is now resting within the crypto top 10, according to

“Still being a nascent asset class, the digital asset market continues to go through price discovery and this comes with a level of volatility,” Jeff Yew, CEO of Monochrome, Australia’s first fund to offer institutional-grade exposure to Bitcoin, told Forkast.News via a written statement. “Bitcoin has been garnering attention as it begins to be adopted by a wider range of investors. The investor base is starting to shift from retail investors to large institutions.

“With the digital asset industry in its early stages, and Bitcoin at the forefront of it, speculation and market sentiment plays a large factor in its pricing,” Yew added. “Much of Bitcoin’s price is sentiment or “narrative-driven,” in that there is a prevailing market thesis about what Bitcoin is at this particular moment in time, and the asset is priced accordingly.”

Part of that market thesis is the debate around Bitcoin’s relationship with gold, which Sullivan told Forkast.News has underperformed this year, as a growing number of people have begun to trade Bitcoin as a preferred hedge against growing inflation fears. But as the cost of both mining and storing gold continues to rise, Sullivan believes this is only going to push more people into Bitcoin or crypto in general.

“Look at the costs now of mining gold [and] look at the cost of holding gold,” Sullivan said, “[then] to the cost of Bitcoin, the cost of mining it and the cost of then holding it; because holding it is actually very cheap and it’s a lot more liquid. So that is going to mean that it becomes definitely part of a balanced portfolio in that respect.”

As Bitcoin and cryptocurrencies begin to gain more mainstream adoption, Sullivan believes this will only lead to its price becoming even more closely correlated with stocks and bonds markets. “As [cryptocurrencies] become more institutionally acceptable, then yes, they’re going to see a greater correlation because people are going to use them as another tool in that portfolio management,” he said.