Bitcoin continued its dramatic bearish rout, wiping over $400 billion from cryptocurrency markets over the weekend.

The largest cryptocurrency by market value plunged 3.7% to $47,585, according to data from Coinbase exchange, as of 5.35 a.m ET. Bitcoin plummeted to $42,000 Saturday from $57,000 Friday. It rebounded to $50,000 on Sunday.

As of Monday, Bitcoin was down about 30% from its November all-time high record of $69,000. The price plunge indicates that Bitcoin is still a highly volatile and risky investment.

Meanwhile, Ether, the second-largest cryptocurrency globally plunged 6.4% to $3,951 Monday on Coinbase. Ether has also crashed Saturday, decreasing to $3,570. 

The weekend crash wiped over $400 billion from the global cryptocurrency market. The total market capitalization of all cryptos fell from $2.6 trillion to as low as $2.2 trillion Monday, according to CoinMarketCap. os

The plunge followed a big sell-off of technology and meme-stocks. One of the major factors that affected the cryptocurrency and stock markets was the emerging Omicron coronavirus variant. 

Meanwhile, fears that the Federal Reserve will tighten monetary policy, have put investors and traders on their nerves. 

Market structure caused the crypto crash

According to Analysts, the cryptocurrency crash was caused by the market’s structure. For instance, many traders use derivatives — contracts that allow traders to speculate on the direction of an asset without owning it. 

After prices plunged on Friday, many exchanges “liquidated” the positions of traders to ensure that they can cover losses. In return, the liquidation caused further pressure on the market.

On Friday, more than $2 billion in long positions across the cryptocurrency market were liquidated. About $850 million of these were Bitcoin futures, according to Sean Farrell, head of digital asset strategy at Fundstrat.

Smaller cryptos such as Binance Coin, Cardano, and Solana were also affected by the price plummet at the weekend.

However, Farrell said that "there is reason to believe that bitcoin consolidates around its current level before heading higher," given that traders are likely to be attracted by cheaper prices.

Although the weekend crash caused heavy losses, cryptocurrency prices remain higher on a year-to-date basis. For instance, Bitcoin was up 62% year-to-date, while Ether was more than %430 higher.

Susannah Streeter, senior markets analyst at broker Hargreaves Lansdown, said: "Crypto coins and tokens have been propelled higher in this era of ultra-cheap money."

She added: "As speculation swirls about just when central banks will start further tightening mass bond-buying programs and start raising interest rates, they are likely to continue to be highly volatile."