The crypto market’s carnage has accelerated, with no immediate respite in sight. Taking the most recent drop into account, investors have lost over $2 trillion (approximately Rs 15.65 lakh crore) in the last eight months.
Only eight countries have a GDP greater than what the crypto market has eroded in less than three quarters when we compare the notional value lost. Canada and Italy have GDPs that are slightly more than $2 trillion, whereas Brazil’s GDP is $1.83 trillion.
The total market capitalization (m-cap) of the digital market is slightly higher than $1 trillion, having peaked at more than $3 trillion in November 2021.
Bitcoin, the most valuable crypto token, is just above the $25,000 mark. Its market cap has fallen below $500 billion, or half a trillion, after falling more than 20% over the weekend.
Its closest competitor, Ethereum, has barely held the $1,300 mark, with a total valuation just above $160 billion.
Bitcoin Market Cap at 47.25%
Both tokens are down roughly 70% from their peaks. Bitcoin has a market cap dominance of approximately 47.25 percent, implying that altcoins are only worth a few billion dollars.
Market participants are closely linking the crypto market’s weakness to the traditional asset class.
According to Shivam Thakral, CEO of BuyUcoin, after the consumer price index reported the highest inflation since 1981, financial markets around the world experienced a sharp downturn. Rising food, gas, and energy prices, he added, are putting tremendous pressure on the cryptocurrency market. “The market is expected to remain choppy in the coming weeks and the globe continues to report high inflation numbers.”
According to Anndy Lian, Chairman of BigONE Exchange, the weakness is exacerbated by traditional institutions that are only interested in short-term gains. He continued, “The quick outflow of money left us high and dry.”
“We saw a global economic slowdown due to inflation and war, which led to lower demand. There are liquidity concerns, which could lead to an unsustainable annual percent yield.”
Curve Dao Token, Nexo, Fantom, Stepn, Waves, Kava, and THORChain have all suffered significant losses. These tokens have dropped by 20% in the last 24 hours.
Convex Finance, ApeCoin, Avalanche, Near Protocol, Axis Infinity, Harmony, and The Graph are down by 35-50% on a weekly basis. The majority of this correction occurred over the weekend.
According to Praveen Kumar, Founder & CEO of Belfrics Group, market volatility will continue, which will have a significant impact on the valuation of other coins such as Ripple, Cardano, Tether, and Solana, among others.
Based on current market sentiments and statistics, the recovery will be slow, according to Lian of BigONE Exchange. “This could be the start of another crypto winter that lasts another two years,” he adds.
On the other hand, some experts advise investors to buy the dips in order to average out their costs and make long-term gains. Going forward, I believe the volatility will continue, putting enormous pressure on Bitcoin and other key altcoins, according to Kumar of Belfrics.