Bitcoin (BTC) and the broader cryptocurrency market fell nearly 10% on Saturday, with the price of the largest digital asset briefly falling below $62,000 before recovering to around $64,000 as of press time.
It wasn't alone: other major digital assets saw similar falls over the past 24 hours, including ether (ETH), which fell 7% to just under $3,000, BNB (BNB) (down 9%) and solana (SOL) (down 12%), according to CoinGecko. Trading volume has risen over that same time period.
The decentralized finance (DeFi) sector has been hit particularly hard as a result of the market chaos, with depressed prices forcing liquidations and raising the potential of havoc for some protocols.
Among the protocols being closely watched is Ethena, the buzzy Ethereum project behind USDe, a "synthetic dollar" built to mirror the price of the US dollar. Ethena has attracted more than $2 billion in deposits, but it uses a controversial method for maintaining USDe's one-dollar "peg" that hasn't been tested under such adverse market conditions.
The immediate cause of Saturday's market declines was not clear, though former BitMEX CEO Arthur Hayes wrote in a blog post last week that dollar liquidity would drop right before tax payments are due in the U.S. on April 15 – this coming Monday. Lower liquidity would lead to lower prices, he said.
Read more: Bitcoin Could Slump Around Reward Halving Time, Arthur Hayes Says
The declines also came as Iran launched drone and missile strikes against Israel, in what the Iranian government said was retaliation for an airstrike on its consulate in Damascus, Syria that it attributed to Israel.
Crypto market prices began to recover after the X (formerly Twitter) account associated with Iran's Permanent Mission to the United Nations said "the matter can be deemed concluded," though it warned of a "considerably more severe" attack "should the Israeli regime make another mistake."
Edited by Kevin Reynolds and Aoyon Ashraf.