By
Bena Ilyas
April 18th, 2024
There’s a bloodbath all across the crypto market with the broader crypto market losing 33% valuation in just over the matter of a month.
It’s been a brutal sell-off in the broader cryptocurrency market since April 2022. The entire crypto market has lost one-third of its valuation i.e. over $800 billion in just over a month’s time.
The world’s largest cryptocurrency has corrected over 25% in a month’s time eroding nearly $400 billion in investors’ wealth. The rest of the altcoin space has added to an additional $400 billion in losses.
Bitcoin (BTC) contributes to over 40% of the overall crypto market. The BTC price, however, slipped under $30,000 earlier this week hitting a 10-month low. Bitcoin and the broader cryptocurrency market have been largely following the US equity market which is on a freefall recently.
Soaring inflation and concerns over interest rate hikes have put severe pressure on US equities. The ripple effect of the same has been spread over Bitcoin and the overall crypto space. On-chain data provider Glassnode reports:
“Bitcoin remains highly correlated to the broader economic conditions, which suggest the road ahead may unfortunately be a rocky one, at least for the time being”.
However, some investors have been taking advantage of the recent price fall in Bitcoin. El Salvador President Nayib Bukele announced purchasing the Bitcoin dip. The Latin American country added 500 more Bitcoins to its reserves taking its holdings above 2,300 Bitcoins. Furthermore, as per the recent report from CoinShares, Bitcoin (BTC) witnessed net inflows of $45 million last week. The report notes:
“Bitcoin saw inflows totalling US$45m, the primary digital asset where investors expressed more positive sentiment, with total assets under management (AuM) falling to very similar levels seen during the lows in sentiment seen at the beginning of the year”.
Crypto Market Showing Signs of Weakness
The entire cryptocurrency market has been showing signs of weakness since the beginning of the year. Bitcoin has been sinking under crucial support levels and so have been several altcoins.
Sebastien Galy, senior macro strategist at Nordea Asset Management draws similarity between crypto and high-growth stocks. Thus, he expects crypto to come under pressure as central banks start to tighten their monetary policy. “Enormous amount of liquidity that has inflated some of these cryptocurrencies,” said Galy.
On the other hand, the recent collapse of Terra’s UST stablecoin has shaken the market. As a result, Terra’s native cryptocurrency LUNA has lost more than 80% of its value and has collapsed under $10 earlier today.