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The whole cryptocurrency market cap has fallen beneath $1 trillion for the primary time since January 2021.
Crypto in disaster
Crypto traders appear to be pushing for exit after extra macro turmoil.
The crypto market has seen additional losses following Friday’s higher-than-expected CPI inflation. Over the weekend, bitcoin fell 17.4% to report a recent yearly low of round $23,911. Ethereum, the second largest cryptocurrency, underperformed, falling 27.3% over the identical interval.
Though the US Federal Reserve will hike rates of interest by a complete of 75 foundation factors in 2022, Inflation has proven little signal of abating, making extra aggressive price hikes extra probably sooner or later. By elevating rates of interest, the Fed hopes to carry inflation again to acceptable ranges by slowing financial development. Nonetheless, this has a destructive affect on dangerous belongings akin to shares and cryptocurrencies.
Because the Fed first dedicated to elevating charges earlier this yr, the crypto market has misplaced over $800 billion in worth. In March, the whole market cap of the sector was round $1.8 trillion; Now, information from CoinMarketCap exhibits the asset class’s worth has fallen beneath $1 trillion for the primary time since January 2021.
Whole Cryptocurrency Market Cap. Supply: CoinMarketCap
Bitcoin has traditionally held up higher than different crypto belongings throughout bearish market situations, and this time isn’t any completely different. Over the previous month, Bitcoin’s market dominance has elevated by over 6%, suggesting that traders are exiting smaller and extra unstable cryptocurrencies in favor of Bitcoin.
Elsewhere, the tech-stock-heavy NASDAQ 100 was additionally hit arduous, with the index’s futures contracts down 3.1% in early commerce. In current months, crypto belongings have expressed excessive correlation with conventional shares. Continued weak point within the NASDAQ 100 and S&P 500 will probably add stress to the already battered crypto market.
Whereas macroeconomic components proceed to weigh on the crypto market, sector-specific points are additionally fueling bearish sentiment. Crypto lending platform Celsius introduced as we speak that it has frozen buyer withdrawals, swaps and remittances attributable to “excessive market situations.” The event follows weeks of rumors that the crypto lender may face chapter points because of the crypto market decline.
Disclosure: On the time of writing this text, the writer owned ETH and several other different cryptocurrencies.
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