Cryptocurrency Markets Plunge to Lowest Level Since November 2021 Following Bybit Hack and Memecoin Crash

The global cryptocurrency market has plunged over the past 24 hours, with the overall market capitalization falling to a three-year low, according to data from CoinMarketCap. The plunge came shortly after US President Donald Trump announced tariffs on imports from Canada and Mexico, sending panic through investors across the financial sector.

As of Tuesday afternoon, the total cryptocurrency market capitalization had fallen by about 8% to about $2.86 trillion – its lowest level since November 2021. The price of Bitcoin, the world's largest cryptocurrency, fell by 8% to $86,700, hitting its lowest level since November last year. Ether, XRP, and Solana also suffered, falling by 8-10%.

Richard Teng, CEO of Binance, believes that the plunge is just a short-term tactical pullback and does not represent a structural downturn. “Cryptocurrency markets respond to macroeconomic fluctuations like traditional assets, but they always recover with remarkable resilience. The core drivers of crypto growth remain intact,” Teng wrote in a post on social media platform X.

A notable trend is the increase in Bitcoin’s dominance in the crypto space. In November 2021, Bitcoin accounted for about 41% of the market, but now that number has increased to 61%. Meanwhile, Ether has dropped from 20% to 10%, and other small-cap cryptocurrencies have seen a sharp decline in market share.

The end of the memecoin era also contributed to the sell-off. Bitwise CIO Matt Hougan pointed out that the combination of the collapse of memecoin Melania, Libra, and the laundering of stolen ETH from the Lazarus hacker group has caused the market to lose confidence in the segment. Hougan predicts the collapse of memecoins will occur within the next 6 months, as their value gradually becomes meaningless.

The recent Bybit hack, carried out by the Lazarus hacker group, became the largest cryptocurrency attack ever, with the total value of stolen assets amounting to more than $1.5 billion in ETH and other Ethereum-based tokens. Shortly after, the memecoin LIBRA – promoted by the President of Argentina Javier Milei – dropped 95% in value, from a valuation of $4.5 billion.

Daily liquidations on futures exchanges tracking the price of Bitcoin hit $227 million on Monday, the third-largest since September 2024. The GMCI 30 Index, which represents the top 30 cryptocurrencies, fell 6% in 24 hours and is down 26% over the past month. US-based spot Bitcoin ETFs saw $516 million in daily net inflows on Monday, and fell another 6% on Tuesday.

Despite the bleak outlook, Binance’s Teng remains optimistic about the long-term future of crypto. “Market pullbacks can be unsettling for investors, but they are also opportunities for those in the know to position themselves for the next rally,” Teng said. He asserted that the resilience of the crypto market has been proven time and again by macroeconomic fluctuations.

Meanwhile, the US Securities and Exchange Commission (SEC) has made significant moves to regulate the crypto industry, as the agency decided to end its investigations into Uniswap Labs, similar to how it previously did with Coinbase and Robinhood.

Overall, the crypto market is in a period of strong correction, but experts agree that technological advances such as Bitcoin, stablecoins, and DeFi will be the driving force to replace the memecoin collapse, contributing to shaping a more sustainable future for this ecosystem.