The crypto market crashed amid a rising inflation rate. BTC, ETH and others lose the market cap
The crypto markets have hit a new low for the year, with the market capitalisation plunging below the $1 trillion mark for the first time since February 2021. Bitcoin has dropped below $23,000, its lowest point since December 2020. And BTC isn’t the only one, nearly every top coin is now worth half or less of its all-time high.
The total market capitalisation of the market at the time of writing stands at $963 billion, a drop of around 4.1 percent since yesterday. Bitcoin (BTC), the most valuable crypto by market capitalisation, dropped sharply, and its market dominance fell to 45 percent, registering a decrease of 2 percent over the day. Ethereum, the second-largest crypto by market cap, slipped below the $1300 mark, with a total valuation just above $149 billion.
Both tokens are roughly down by 70 percent from their November peaks.
According to Kunal Jagdale, founder of BitsAir, investors have lost around $2 trillion due to the recent market carnage. “The risk aversion sentiments have weighed hard on the digital assets and the new investment asset class,” he added.
Data released on Friday showed that the annual inflation rate in the US accelerated to a 40-year high of 8.60 percent. The bears maintained their dominance in the global crypto market over the weekend. It is important to note here that the US Dollar Index (DXY) is also at a six-month high, having gained 2 percent in a single day and causing a drop in the stock and crypto markets.
“The crypto market has been under pressure from the Federal Reserve, hiking the interest rates to combat inflation over the past few months. Bitcoin, Ethereum, and most cryptos suffered losses over the weekend after a broad sell-off following the data showing US inflation hitting a 40-year high,” Edul Patel, co-founder and CEO of crypto investment platform Mudrex, said in a statement.
Besides the high inflation rates, several intramural and extramural factors have adversely impacted the crypto market. The market hasn’t yet revived completely from the Terra-UST crash and might face another in the form of Celsius’s looming shutdown.
“The tightening of monetary policy is denting the appeal for riskier assets like crypto and equity. Other than this, rising inflationary worries and looming recession concerns are also hurting the market for digital assets, which is quite in the nascent stage,” Jagdale said.
Despite the pessimism in the crypto market, some experts advise investors to buy the dip in order to average out their costs and make long-term gains. Based on current market sentiments and statistics, the recovery will be slow, according to Anndy Lian of BigONE Exchange. He added, “This could be a start to another crypto winter which could last for another 2 years.”
Among the intramural factors, there is a lot of talk about regulatory actions from various global governments, making the industry and investors nervous. Furthermore, Terra’s LUNA fiasco is a major contributor to the fallout. It is rumoured that Luna has wiped out $40 billion from investors’ bank accounts. Last week, digital assets worth approximately $102 million were sold by US crypto funds ‘in anticipation of hawkish monetary policy from the US Federal Reserve.
Despite the fact that the crypto market has tanked, NFT trading volumes have increased. Top NFT projects such as Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), and Crypto Punks have increased by 100 percent in the last 24 hours.
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.