In just five days, the value of the cryptocurrency market has dropped by 23%. It's been dragged lower by a bitcoin sell-off, which was recently sparked by Tesla CEO Elon Musk's remarks.
According to CoinMarketCap.com, the market cap for global digital currencies was $1.97 trillion on Monday, down from a recent high of $2.56 trillion on May 12.
In a note to Insider on Monday, Edward Moya, a senior market analyst at Oanda, wrote, "The crypto environment is in the danger zone, as no one has a handle on short-term momentum because of confusion on where Elon Musk stands on bitcoin."
On Monday, bitcoin dropped below $43,000 for the first time since February, while other cryptocurrency prices fell as well. Ether, the Ethereum blockchain's token, was down nearly 8%, Cardano-ADA was down 10%, and Binance Coin was down around 9%. Dogecoin has lost 7% of its value.
According to CoinGecko, Solana was the only one of the top 20 cryptocurrencies by market cap to gain ground on Monday, up around 0.2 percent.
Bitcoin fell on Monday after Tesla CEO Elon Musk hinted on Twitter that the company could - or had sold - its cryptocurrency holdings. After Musk explained that the electric vehicle maker still owned its bitcoin share, it rose slightly. The recent selloff in bitcoin was triggered by Musk's announcement last week that Tesla would no longer accept bitcoin as payment due to the "insane" the amount of energy required to create new coins and keep the network secure.
"A major financial institution is unlikely to make a large bet on cryptocurrency in this market as environmental concerns arise," Moya said.
In a note, Justin Chuh, senior trader manager Wave Financial, a controlled digital asset investment company, said, "Everyone has been watching BTC fall, crashing 35 percent from all-time highs in just a month." "Do you recall gravity and volatility?" They are true. Some of the newcomers to the crypto market are about to get their first taste of risk.
He went on to say: "A reversal was unavoidable. However, we must agree that the voices chirping about on social media aren't helping and aren't capable of making a difference. This is good for you, but I'm sure we all wish it didn't happen."
"Retail traders on social media sites TikTok and Twitter are losing hope and are getting closer to hitting the panic button," said Moya, referring to the widespread risk aversion that hit US stocks on Monday.