Bitcoin (BTC) and other major cryptocurrencies experienced a significant drop in value, with BTC briefly falling below $62,000 before recovering to around $64,000. This market turmoil also affected other digital assets such as Ether (ETH), Binance Coin (BNB), and Solana (SOL), all of which saw price decreases over a 24-hour period. The trading volume also increased during this time, indicating heightened market activity.
The decentralized finance (DeFi) sector faced challenges due to the market chaos, leading to price depressions and potential liquidations that could impact various protocols. One project under scrutiny is Ethena, the Ethereum-based platform behind USDe, a synthetic dollar pegged to the US dollar. With over $2 billion in deposits, Ethena’s method for maintaining USDe’s peg is untested under such adverse market conditions, raising concerns among investors and analysts.
While the exact trigger for the market decline on Saturday was unclear, former BitMEX CEO Arthur Hayes suggested in a recent blog post that a decrease in dollar liquidity before U.S. tax deadline on April 15 could lead to lower cryptocurrency prices. However, market prices started to recover after a statement from Iran’s Permanent Mission to the United Nations hinted at a resolution in a tense geopolitical situation, providing some relief to cryptocurrency investors.
