If we compare the notional value lost, only eight countries have a GDP greater than what the crypto market has eroded in less than three quarters. Countries like Canada and Italy have a GDP of just over $2 trillion, while Brazil’s GDP was $1.83 trillion.
The total market capitalization (m-cap) of the digital market is slightly above the $1 trillion mark, which was over $3 trillion at its peak in November 2021.
Bitcoin, the largest crypto token, barely breaks the $25,000 level. It fell more than 20% over the weekend, with its market capitalization falling below $500 billion or half a trillion.
Its largest counterpart, Ethereum, barely managed to hold the $1,300 mark, with a total valuation of just over $160 billion.
Both tokens are down around 70% from their highs. Bitcoin’s dominance in total market capitalization has been around 47.25%, showing that altcoins are only worth a few billion dollars now.
Market participants closely associate weakness in the crypto market with the traditional asset class.
Shivam Thakral, CEO of BuyUcoin, said after the consumer price index reported the highest inflation since 1981, financial markets around the world saw a sharp decline. Rising food, gas and energy prices are putting enormous pressure on the crypto market, he added.
“The market is expected to remain choppy in the coming weeks and the world continues to report strong inflation numbers.”
Anndy Lian, president of BigONE Exchange, said the weakness is amplified by traditional institutions that were only there for short-term gains. The rapid outflow of money has left us dry, he added.
“We have seen a global economic slowdown against a backdrop of inflation and war, which then led to lower demand. There are liquidity issues and this could lead to an unsustainable annual percentage return.”
Among altcoins, Curve Dao Token, Nexo, Fantom, Stepn, Waves, Kava, and THORChain took quite a hit. These tokens are down 20% in the last 24 hours.
On a weekly basis, Convex Finance, ApeCoin, Avalanche, Near Protocol, Axis Infinity, Harmony and The Graph are down 35-50%. Most of this correction was seen over the weekend.
Praveen Kumar, Founder and CEO of Belfrics Group, said market volatility will continue which will have a significant impact on the valuation of other coins including Ripple, Cardano, Tether, Solana, among others.
Recovery will not be imminent based on current market sentiment and statistics, BigONE Exchange’s Lian said. “This could be the start of another crypto winter that could last another 2 years,” he adds.
On the other hand, some experts suggest investors buy the dips to average out the cost and realize longer-term gains. Going forward, I think volatility will continue and there will also be immense pressure on Bitcoin and other key altcoins, Belfrics’ Kumar said.
BuyUcoin’s Thukral said the current drop in crypto prices is allowing investors to buy crypto at 2021 prices and we expect seasoned investors to take advantage of the drop.
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)