The price of the cryptocurrency market has again declined further with the overall capitalisation also decreasing once again. The market share of Bitcoin has also taken a large hit with a decline over the past 3 weeks, currently, Bitcoin’s market share has declined to 42.6%. Ethereum currently has the second-largest market share after Bitcoin.
The price movement of Bitcoin has declined by 10.31% over the past week but had attempted to build some bullish momentum early this morning during the Asian Session. Early this morning the price of Bitcoin shot up 12.30% over a period of 3 hours but soon after collapsed by 8.20%. It is not yet known what sparked the sudden high demand for cryptocurrencies, according to Bloomberg the sudden interest may be related to technical elements as traders attempted to buy at the lower price. Currently, the daily price is still in the positive zone but has mainly declined during the European session.
Many traders have abandoned the cryptocurrency market over the past week for multiple reasons. Investors are now expecting the Federal Reserve to remain hawkish in the longer term. The chances of a 75 basis point hike instead of 50 basis points has increased drastically. This has resulted in consumer confidence declining to the lowest point since lockdowns were in place. Consumer confidence has significantly dropped as inflation and higher interest rates dip in citizens’ pockets.
Cryptocurrency traders are also being influenced by the decline in the global stock market as well as the increased risk of a recession. Both factors have dampened the risk appetite of traders.
The price movement in the cryptocurrency market is not solely influenced by the lack of demand but also by the domination of sellers in the cryptocurrency market. According to CoinShares the amount of capital being withdrawn mounted a whopping $423 Million. CoinShares also advised that the highest demand was on Bitcoin as expected.
There are several issues which have arisen from the lack of demand for companies associated with this industry due to the lack of interest from investors. As a result of the liquidity crisis, the activities of a large Singaporean hedge fund known as “Three Arrows Capital” were terminated during the week.
There were also reports from the Celsius lending company and the CoinFlex exchange that advised they temporarily suspended withdrawals for clients, citing "extreme market conditions." The head of FTX, Mr Bankman-Fried, advised Forbes during an interview that large digital exchanges are coping with the situation without issues, but small sites are very close to bankruptcy. According to Mr Bankman-Fried, the condition of the cryptocurrency market is not likely to improve until further clarity is provided regarding the near-term economy and interest rate hikes halt.
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