Bitcoin Swings Wildly, Heads Lower
NAGA | Jul 01, 2022 09:12AM ET
The cryptocurrency market cap has again declined. The market share of Bitcoin has also taken a significant hit over the past three weeks. Currently, Bitcoin’s market share has declined to 42.6%. Ethereum currently has the second-largest market share after Bitcoin.
Bitcoin has declined by 10.31% over the past week. It attempted to build some bullish momentum early this morning during the Asian Session rallying 12.30% but plunged 8.20% later in the day.
It is not yet known what sparked the sudden surge in cryptocurrencies. According to Bloomberg, the sudden interest may be related to technical elements as traders attempted to buy at a lower price. The daily price is still in the positive zone but has mainly declined during the European session.
For multiple reasons, many traders have abandoned the cryptocurrency market over the past week. 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 have increased drastically. 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 and the increased risk of a recession. Both factors have dampened their risk appetite.
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 According to CoinShares, the amount of capital being withdrawn mounted a whopping $423 Million.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.
The lack of demand for cryptos has caused several issues for companies. As a result of the liquidity crisis, the activities of a large Singaporean hedge fund 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." During an interview, the head of FTX, Mr. Bankman-Fried, advised Forbes that big digital exchanges are coping with the situation without issues. Still, small ones 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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