The global crypto market is down 0.88 percent to $1.96 trillion over the previous day, according to coinmarketcap.com. Bitcoin has increased marginally in the last one day to $42,173. The crypto has shed over 8 percent in the last week.
The cryptocurrency market continues to roll in the doldrums but most coins are still better off than they were a year ago.
When most cryptocurrencies, like Bitcoin, Ethereum, and Cardano, were trading at an all-time high in mid-November last year, analysts were bullish that they could climb even higher by the end of the year. But, then came December and January, and most cryptocurrencies went for a nose-dive. As a result, gains made in those heady days have been wiped out.
According to experts, the cryptocurrency market is on the cusp of entering a bear phase. While this may be an opportunity to ‘buy the dip’ — pick up cryptocurrencies at low prices — it could also be the start of another ‘crypto winter’ akin to the one seen before the rise of 2020.
Bitcoin fell over 5 percent on Monday to its lowest in over five months, tumbling under the $40,000 level.
The largest cryptocurrency fell as far as $39,558, its lowest since August 5, 2021. It was last down 4.7 percent, more than 40 percent below a record high of $69,000 hit in November.
After taking a tumble on Monday, it recovered some ground, rising to $41,198.
The original cryptocurrency bounced off the lows of the day after falling as much as 6% to $39,774 in New York trading, bringing its loss this year to about 14%. The decline is the largest for the start of the year since at least 2012. It has slumped more than 40% since reaching an all-time high of almost $69,000 in early November.
“It has had a pretty shocking start to 2022,” said Fiona Cincotta, senior financial markets analyst at City Index. “There’s a lot going on. We know that Bitcoin is volatile but even for Bitcoin, we’re seeing some really big moves.”
The largest cryptocurrency by market value approached $40,000 for the first time since late September, bringing its losses since a peak just three months ago to about 42%. Ether, the second-largest digital asset, also declined, while popular DeFi tokens such as Uniswap and Aave remained under pressure into the weekend.
The choppiness comes amid signs that the Federal Reserve is getting ready to combat persistent inflation through the withdrawal of stimulus. Minutes from the central bank’s December meeting, published Wednesday, flagged the chance of earlier and faster-than-expected rate hikes as well as a potential balance-sheet rundown.
Those actions would remove liquidity from the system, which could dull the shine of high-growth and speculative assets. “If the Fed is going to be more aggressive, risk assets, including cryptos, are more vulnerable,” said Matt Maley, chief market strategist, Miller Tabak + Co.
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