Bitcoin investors believe that a decline to $38,000 will trigger a minor rally in the market. The value decline marks one of Bitcoin’s worst starts to a calendar year. The projected policy of the Fed has been blamed for the collapse.
As word of the Fed’s decision to raise interest rates spread via the mainstream media, stock markets and cryptocurrency markets plummeted. Bitcoin was one of the worst-affected asset types, losing up to 9% of its value in a single day. This caused the asset to fall to lows of $41,000, a long cry from the $48,000 it began the year with.
The Crypto Dread and Greed Index shows that sentiments are extreme fear at 15 points. The general consensus is that the asset is about to enter a bear market, with numerous experts drawing parallels between it and the May 2021 catastrophe.
Other experts, on the other hand, believe that the asset will bottom between $38,000 and $40,000. Mike Novogratz, CEO of Galaxy Digital, believes this and is “waiting a little longer” to invest in the asset. According to an interview with CNBC, the seasoned investor believes there is a “tremendous amount of institutional action on the sidelines.”
Bitcoin’s market cap is now less than $1 trillion, ranging around $800 billion. The air has been filled with rumors that the top cryptocurrency is losing its grip on the whole ecosystem as its market share falls below 40%. For the most of 2019, 2020, and 2021, Bitcoin’s dominance remained much above 40%, even reaching a high of 50%.
Altcoins have done no better in their own terms. Ethereum, Polkadot, and Solana all suffered double-digit losses as a result of the market drop. ETH has lost 13.10% this week, while SOL and DOT have lost as much as 14.44% and 6.49%, respectively. The broad downturn of cryptocurrencies calls into question whether the markets are in altcoin season.
The worldwide cryptocurrency market capitalisation is $2 trillion, although daily volume is down by up to 18% at $105 billion.