The world of cryptocurrencies has experienced yet another shakeup. Leading the pack, Bitcoin faced a significant drop of approximately 6% this week, settling at $26,038.41, based on data from Coin Metrics. This downturn, which took a sharp dive starting late Thursday, sent ripples throughout the cryptocurrency ecosystem, causing several other prominent cryptos to follow suit.

Ether and Binance coin both experienced a decline of around 4%. Meanwhile, Cardano’s ada witnessed a dip over 3%, and Ripple’s XRP faced a substantial fall of 13%. Another notable mention is the Solana token which decreased by 7%.

Reflecting on the past performance, Bitcoin marked its seventh weekly loss in the previous eight weeks. This particular week, with a decline of 11.28%, is considered its most challenging since last November. In the cryptocurrency realm, which operates 24/7, Coin Metrics defines a week as the duration between the close of the stock market at 4:00 p.m. ET on one Friday and the next.

But what was the primary catalyst for this sudden drop?

Thursday saw the cryptocurrency market under consistent strain. However, around 6 p.m. ET, prices plummeted. This decline was reportedly instigated by a piece in The Wall Street Journal. The article suggested that Elon Musk’s SpaceX had reduced the value of its Bitcoin holdings by $373 million throughout the last year and in 2021. Moreover, rumors began circulating that the space exploration company had offloaded its Bitcoin assets. Darius Tabatabai, the co-founder of the decentralized exchange Vertex Protocol, noted, “The selloff appears largely fear-induced, stemming from headlines suggesting SpaceX’s Bitcoin sale.” He further highlighted that there isn’t concrete evidence supporting these claims. The market’s delicate summer liquidity, combined with panic selling, resulted in a steep price drop, triggering a domino effect of liquidations in derivative markets.

Tabatabai pointed out the current negative funding rates for perpetual futures, signaling possible bearish momentum. However, he also emphasized the unpredictability of the situation, given the rapidity and intensity of the price shift.

Despite the seeming gloom, it’s crucial to see the bigger picture. Bitcoin’s performance during the third quarter has traditionally been weaker. Currently, it’s down by 14.25% for this quarter and roughly 10.69% for August. Yet, keeping in perspective the market’s overall trajectory, Bitcoin is still up by an impressive 57% in 2023.

In conclusion, while the cryptocurrency market remains susceptible to fluctuations influenced by external news and events, the long-term potential and growth trajectory of digital currencies like Bitcoin cannot be ignored.