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Wild Weekend For Cryptos

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Cryptocurrency prices crashed wildly over the weekend. The massive crash and the continuing sell-off is attributed variously to fears of greater regulatory control over crypto, unknowns regarding the Omicron variant, concerns regarding frothy valuations in speculative corners of crypto space like memes and NFTs, spillover effects of leveraged trading in crypto derivatives, etc.

The hyper-inflation narrative gaining ground that is expediting the exit from the easy money policy has also potentially unnerved investors. The news of hacking at Bitmart crypto trading platform and the suspension of digital currency exchange Bitget appear to have exacerbated the negative sentiment.

The aggregate crypto market capitalization which was $2.6 trillion on Friday morning is currently at $2.24 trillion, after touching a low of $2.12 trillion past midnight on Friday.

Bitcoin crashed around 25 percent, from a day-high of $57,482.17 on Friday to a day-low of $42,874.62 on the next day. It has since recovered around 13 percent to trade at $48,636.17. As per coinmarketcap.com, Bitcoin's market dominance fell to as low as 40.11 percent on Saturday. It is currently at 41.1 percent.

Ethereum crashed around 24 percent, from a day-high of $4,647.29 on Friday to a day-low of $3,525.49 on the next day. It has since recovered around 15 percent to trade at $4,064.01.

The whipsawing has left crypto watchers stunned as 21 percent of the Bitcoin holders are currently out-of-money. In contrast, only 6 percent of the Ethereum holders are out-of-money at current prices. The cumulative loss from the peak too is sharply higher for BTC, at 29 percent, whereas Ethereum is only 16 percent below its all-time high touched in mid-November.

Among the top-100 cryptocurrencies by market capitalization, around 20 percent have weekly losses of more than 30 percent. Around 35 percent have weekly losses of between 20 and 30 percent. Approximately 25 percent of the cryptocurrencies have losses between 10 and 20 percent in the last week. Only 5 cryptocurrencies in this category remain positive over the seven-day horizon. Of this, 44th ranked UNUS SED LEO (LEO) and 74th ranked OKB(OKB) alone are positive on an overnight basis as well.

LEO is a utility token that's used across the iFinex ecosystem allowing Bitfinex users to save money on trading fees. OKB is the utility token of the crypto exchange OKEx.

Smart Contracts market capitalization has fallen from $820 billion on Friday to $709 billion. DeFi market capitalization dipped from $183 billion to $150 billion. NFTs & Collectibles declined to $57 billion from $ 78 billion on Friday. Metaverse market cap is at $38 billion, down from Friday's level of $52 billion. Meme category market cap slipped to $42 billion from $53 billion whereas Gaming category has fallen to $37 billion from $50 billion.

Stablecoins market cap has increased from $149 billion to $152 billion.

Rock-bottom interest rates drove a boom in cryptocurrencies including a patronage by institutional investors who plunged in with their inflation hedging bets. With a faster-than-expected progression to a tight monetary policy regime, the expectations from the cryptocurrency industry and the equations established over the years are bound to be revisited.

In any event, it may be time to fasten seat belt to brace for a bumpy ride ahead.

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