Bitcoin’s (BTC) recent drop below the $30,000 level sent smaller cryptocurrencies tumbling Wednesday afternoon.
BTC’s price fell to as low as $29,874, a 1.8% decline over the past 24 hours, according to CoinDesk Indices data. The token has pared some of the losses later, and was trading slightly above $30,000.
Still, the decline led to a sudden sell-off in altcoin – short for alternative cryptocurrencies – markets, which suffered 5-10% drops from Tuesday, same time.
The Optimism network’s OP token recently fell 10%, while Cardano’s ADA, Polygon’s MATIC and Avalanche’s AVAX suffered the largest falloffs among the top 20 cryptocurrencies, losing 6%, 7.7% and 8%, respectively.
Ether (ETH), the token with the second largest market cap, held up better than most altcoins but underperformed BTC, sliding 3.2%.
Altcoins’ underperformance extended BTC’s grip over the broader digital asset market. The BTC dominance rate, which shows the largest cryptocurrency’s share in the total market, soared above the 52% level for the first time since April 2021, according to TradingView data.
The recent frenzy of institutional investment activity, underscored by traditional finance heavyweight BlackRock and other asset management firms filing for a sought-after spot BTC exchange-traded fund (ETF), lifted the price of BTC to a one-year high this month.
Meanwhile, regulatory risks weighed on the performance of smaller cryptocurrencies. Early June, the U.S. Securities and Exchange Commission (SEC) deemed a handful tokens including SOL, MATIC and ADA unregistered securities in lawsuits, leaving popular trading platforms such as RobinHood delisting tokens.
“With some newer tokens facing intensified regulatory scrutiny in the U.S., BTC has pulled ahead in 2023,” Kyle Waters, analyst at digital asset research firm CoinMetrics, wrote in a report. “We can see that BTC’s 85% return, year-to-date is outpacing most of the other major digital assets.
The price downturn caused $115 million of losses during the day to traders with long position betting on higher prices, according to CoinGlass data.