If we compare the notional value lost, only eight countries have a GDP more than what the crypto market eroded in less than three quarters. Countries like Canada and Italy have a GDP of little more than $2 trillion, whereas Brazil’s GDP stood at $1.83 trillion.
The total market capitalization (m-cap) of the digital market is marginally above the $1 trillion mark, which was more than $3 trillion at its peak in November 2021.
Bitcoin, the largest crypto token, is barely above the $25,000 level. It has dropped more than 20 per cent over the weekend, with its market cap slipping below $500 billion or half a trillion.
Its largest peer, Ethereum, has barely managed to hold the $1,300 mark, with total valuation just above $160 billion.
Both the tokens are down about 70 per cent from their peaks. Bitcoin’s dominance in the total market cap has been about 47.25 per cent, which shows that altcoins are left with value worth merely a few billion dollars.
Market participants are linking the weakness in the crypto market closely with the traditional asset class.
Shivam Thakral, CEO, BuyUcoin said after the consumer price index reported the highest inflation since 1981, financial markets across the globe have seen a sharp downturn. The rising food, gas, and energy prices are putting tremendous pressure on the crypto market, he added.
“The market is expected to remain choppy in the coming weeks and the globe continues to report high inflation numbers.”
Anndy Lian, Chairman, BigONE Exchange said the weakness is amplified by traditional institutions who were here just for short term gains. The quick outflow of money left us high and dry, he added.
“We saw a global economic slowdown amid inflation and war, which then resulted in weaker demand. There are liquidity issues and could result in unsustainable annual per cent yield.”
Among the altcoins, Curve Dao Token, Nexo, Fantom, Stepn, Waves, Kava and THORChain have taken a big hit. These tokens are down by 20 per cent in the last 24 hours.
On a weekly basis, Convex Finance, ApeCoin, Avalanche, Near Protocol, Axis Infinity, Harmony and The Graph are down by 35-50 per cent. The major part of this correction has been witnessed over this weekend.
Praveen Kumar, Founder & CEO, Belfrics Group said the volatility in the market would continue which would have a significant impact on the valuation of other coins including Ripple, Cardano, Tether, Solana, among others.
The recovery will not be anything soon based on the current market sentiments and statistics, said Lian from BigONE Exchange. “This could be a start to another crypto winter which could last for another 2 years,” he adds.
On the other hand, some experts are suggesting investors to buy the dips to average out their cost and make gains in the longer term. Going forward, I believe the volatility would continue and there would be immense pressure on Bitcoin and other key altcoins as well, said Kumar of Belfrics.
Thukral from BuyUcoin said that the current dip in the crypto prices allows investors to buy crypto at 2021 prices and we expect the seasoned investors to take advantage of the dip.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)