The cryptocurrency market experienced one of its most devastating single-day selloffs on February 2, 2018, with altcoins bearing the brunt of the carnage. Ethereum, the second-largest cryptocurrency by market capitalization, plunged as much as 32% at its intraday lows before staging a partial recovery, while Ripple (XRP), Bitcoin Cash, and Cardano all posted losses exceeding 25%.
TL;DR
- Ethereum crashed over 32% at intraday lows before recovering to approximately $961
- The total cryptocurrency market cap shed between $100 billion and $115 billion in 24 hours
- Ripple (XRP) fell 38% at its worst, while Bitcoin Cash dropped more than 27%
- Cardano (ADA) declined 36% over the previous seven days, trading at just $0.39
- Multiple regulatory headwinds — from India to Facebook — fueled the panic selling
A Bloodbath Across the Board
February 2 began with a catastrophe already in motion. Bitcoin had broken below $8,000 in overnight trading and briefly touched $7,600 on some exchanges, sending shockwaves through the entire cryptocurrency ecosystem. But while Bitcoin captured the headlines, the damage inflicted on alternative cryptocurrencies was arguably even more severe.
Ethereum, which had been trading near $1,350 just weeks earlier, collapsed dramatically. At its lowest point during the session, ETH had fallen more than 32% — a staggering decline for an asset with a market capitalization exceeding $89 billion at the daily close. By the end of trading, ETH had recovered somewhat to settle around $915, still down more than 9% on the day according to CoinMarketCap data.
Ripple (XRP) suffered even greater percentage losses, plummeting 38% at its worst before partially recovering. XRP was changing hands at approximately $0.88 at the daily snapshot, representing a 27% decline over the previous seven days. The remittance-focused token had lost more than three-quarters of its value from its early January highs above $3.00.
Bitcoin Cash and Cardano Join the Collapse
Bitcoin Cash, the fourth-largest cryptocurrency, was not spared either. BCH fell more than 27% during the worst of the selling before recovering to around $1,191. The fork of Bitcoin had been one of the standout performers during the late-2017 rally but was now experiencing the full force of the market reversal.
Cardano (ADA), which had surged into the top five cryptocurrencies by market cap during the altcoin mania of late 2017, saw its price collapse to $0.39 — a decline of more than 36% over the previous seven days. The project, led by Ethereum co-founder Charles Hoskinson, had seen its market capitalization shrink to just over $10 billion, a fraction of its peak valuation.
What Drove the Altcoin Apocalypse?
Several converging factors contributed to the February 2 altcoin devastation. India emerged as the latest major economy to signal a regulatory crackdown on cryptocurrencies, with Finance Minister Arun Jaitley delivering a statement that rattled markets. The prospect of one of the world’s largest populations being effectively shut out of crypto trading sent investors scrambling for the exits.
Facebook’s decision to ban advertisements promoting cryptocurrencies and initial coin offerings added another layer of selling pressure. The social media giant’s move was interpreted as a signal that mainstream tech companies were distancing themselves from the crypto ecosystem, undermining the narrative of growing institutional and corporate adoption.
Fears that Bitcoin’s lofty valuation may have been artificially propped up further eroded confidence. Reports suggesting potential market manipulation in the run-up to December’s near-$20,000 peak made the rounds among traders already on edge.
Litecoin, NEO, and the Broader Altcoin Picture
Litecoin (LTC) fell to approximately $131, down more than 25% over the previous week. NEO, often dubbed the “Chinese Ethereum,” traded at $120, losing about 12% over seven days. Stellar (XLM) dropped 35% week-over-week to $0.41, while TRON (TRX) suffered one of the sharpest declines at 38% over the same period.
The breadth of the selloff was remarkable. Virtually every major altcoin was deeply in the red, with the total cryptocurrency market capitalization falling from roughly $500 billion to approximately $380 billion in a matter of days. The $100-115 billion single-day wipeout represented one of the largest destructions of nominal wealth in crypto market history.
Why This Matters
The February 2 altcoin crash laid bare the risks of the speculative frenzy that had gripped cryptocurrency markets throughout late 2017. Many altcoins had risen to extraordinary valuations without corresponding improvements in adoption, technology, or real-world usage. When sentiment turned, the lack of fundamental support meant there were few buyers willing to step in at lower prices.
The crash also highlighted the tight correlation between Bitcoin and the broader altcoin market. Despite arguments that altcoins offered diversification benefits, the selloff demonstrated that in periods of extreme stress, nearly all cryptocurrencies move in the same direction — downward. For investors who had rotated profits from Bitcoin into altcoins hoping for outsized returns, the lesson was painful and expensive.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always do your own research before making investment decisions.