Traders and speculators are poised for more volatile conditions over the upcoming weekend after they narrowly steered clear of feared heavy losses on Thursday night.
Crypto holders are growing increasingly frustrated at the lull market with widening spreads and evaporating liquidity during the past couple of months on the back of a pickup in risk aversion and fleeing institutional investors.
As of press time, in the Top 10 big caps, Bitcoin (BTC) is changing virtual hands at US $32,950, Ether (ETH) at US $2,127, ripple (XRP) at US $0.62, Binance Coin (BNB) US $301, cardano (ADA) at US $1.32, Dogecoin (DOGE) at US $0.19, ChainLink (Link) at US $18, UniSwap (UNI) at US $20, Polkadot (DOT) at US $15 and Stellar (XML) at US $0.23.
Tether (USDT), what’s known as a stablecoin pegged to the U.S. dollar to maintain its value stable, is trading at US $0.99, down from US $1. While other cryptocurrencies fluctuate in value, tether’s price is usually equivalent to US $1.
In the past weeks, many investors and economists have expressed their concerns that tether’s issuer is losing its grip as it doesn’t own sufficient US dollar reserves to justify its value. A recent report by JPMorgan said Tether was having hard time to hold cash as banks reject to open deposit accounts for it.
Looking at the recent trading volumes simply indicate subdued trading activity with slightly more sellers than buyers which has continued to provide headwind to the cryptocurrency market.
The important factor here is that unlike previous weeks there is no notable dip buying as fears of lack of momentum against the backdrop of the persistent negative outlook continue to fuel caution and broad risk-off sentiment in the market.
The total market value of cryptocurrencies has dwindled to less than half of what it was near $2.5 trillion mark in April.
When bitcoin sneezes, the crypto market catches a cold as the primary digital coin has increasingly turned into a gauge of market sentiment and risk appetite.
The total market cap of Bitcoin plunged below US $600 billion on Monday, just half of its once whopping US $1.2 trillion value.
The current capped upward traction due subdued buy orders indicates further market-wide losses shouldn’t be ruled out in the coming days.
There is well-tested support around the US $30,000 psychological level and further down at US28,000 levels, which should be sufficient to keep the coin aloft unless something unexpected happens.
The actual slowdown in the market takes its roots back to early May when President Joe Biden’s capital gains tax (CGT) hike hit the news, triggering cautious market sentiment which eventually let to high sell volumes.
There have since been a wide range of stricter regulation announcements from different countries in relation to trading, mining, and using cryptocurrencies. Further restrictions in China has particularly impacted the market as it is one of the biggest participators in the cryptocurrency market by both the number of traders and volume of trading but also is one of the most regulating countries in the world.
A paper by Australian central bank’s Payments Policy Department concludes there is little likelihood of a material take-up of cryptocurrencies for retail payments in Australia in the foreseeable future.