Topics
Cyrptocurrencies | Inflation | Fed rate hikes
Raghav Aggarwal | New Delhi Last Updated at August 26, 2022 15:04 IST
https://mybs.in/2axvDUQ
The crypto market remained flat in the last 7 days. The total market capitalisation (m-cap) slipped marginally from $1.04 trillion on August 19 to $1.03 trillion on Friday. Bitcoin, the largest cryptocurrency by m-cap, was down nearly 2 per cent as compared to August 19 and was trading at $21,446, according to data from coinmarketcap.com.
Ethereum, the second largest cryptocurrency, was down nearly 5 per cent in the same period and was trading at $1,661. Some other coins like XRP and Shibu, however, made gains during the last 7 days.
"Ripple (XRP) and Shiba Inu (SHIB), highlighted a surge in whale transactions to a three month high. Traditional finance companies continued to onboard XRP as a potential ‘opportunity in payments’ and SHIB recorded a resurgence in new holders amidst peak social media mentions," CoinDCX's research team told Business Standard.
Also read: Explained: Ethereum set for mega 'merger' to become more energy efficient
Volatility in the crypto market comes at a time when the share markets were showing high volatility, globally. Nasdaq has fallen 2.5 per cent in the last week. Japan's Nikkei index was over 1 per cent in the red. Sensex was at a 0.4 per cent lower level than what it was at the start of the week, according to market data.
Experts have attributed this to high inflation fueled by the price rise.
"The correlation between equity and debt invariably increases during times when growth is driven by inflation fueled asset prices and not real growth. This is the reason that both stock and debt markets are taking a beating at the same time," Vivek Iyer, partner, Grant Thornton Bharat said.
"Investors want to hold more of cash now rather than lose value further from their mainstream holdings. As a result, we don't see redeployment to crypto as a possibility. Further, existing investors who hold crypto would either want to sit tight or exit," Iyer said further.
The inflation has remained above the threshold limits set by the central banks across the globe. In the US, Fed chair Jerome Powell has repeatedly stated that they will continue rising the benchmark interest rates to bring them under control. UK's inflation breached the 10 per cent mark after over 40 years.
What to expect in the coming days?
"BTC has constantly attempted to keep its price above the US$21,000 support level. If buyers can return to the market, we might see BTC soar to US$22,000 soon. The second largest cryptocurrency, Ethereum, remains bullish as the price is above the key support level at US$1,655. ETH has not yet accumulated enough strength for either growth or fall. However, US$1,700 now plays a vital role for bulls," Edul Patel, CEO and co-founder of global crypto investing platform Mudrex said.
Experts, however, reiterated that the crypto market will continue to see high volatility in the coming days.
"We at least expect the crypto space to demonstrate a range bound volatility between 5 to 10 percent," Iyer said.
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