Cryptocurrency market valuation drops below $1 billion
The total dollar worth of all the shares of a company’s stock, or, in the case of Bitcoin or another cryptocurrency, the total value of all the mined coins. The market cap of a cryptocurrency is determined by dividing the total coins mined by the price of a single coin at any given moment.
Market capitalization may also serve as an approximate indicator of an asset’s stability. A cryptocurrency with a lot larger market cap than one with a much smaller market cap is more likely to be a more stable investment than one with a much smaller market cap, just as a bigger ship can safely sail rough seas. Digital currencies with smaller market caps, on the other hand, are more vulnerable to market whims.
In contrast to earlier bear markets, the cryptocurrency market’s bear market in 2022 has been unique. It was initially described as a correction; however, the correction stories no longer seem to apply. There doesn’t appear to be a technical or underlying cause for the market’s decline. The most obvious explanation is that more money is leaving the country than it is entering.
Strangely, there is a problem because nobody is selling. Instead, they are selling as a result of unmet expectations. Some investors and traders short the market because they believe it to be overvalued. Since the underlying principles stay constant, Bitcoin continues to be a reliable method for international financial transactions.
The initial cryptocurrency and current market leader is Bitcoin. Although it was initially intended to be a peer-to-peer payment system, the case for using it as a store of value is now considerably more compelling than its usage as a medium of exchange. In fact, a few well-known personalities in the cryptocurrency industry have even suggested using Bitcoin for regular transactions.
Cryptocurrency Market Cap: In-depth analysis
From the standpoint of a store of value, this concept seems good. But for those who view Bitcoin as a substitute for currency, it seems counter-productive. And it can even be harmful to the objective of widespread adoption. Following the Powell decision, riskier assets came under selling pressure as global stocks fell, with falls in tech companies leading the way. On Friday, the NDX for the Nasdaq 100 closed 4.1% down. One of those assets was Bitcoin BTCUSD. It is the largest cryptocurrency in the world by market cap, which has dropped almost 9%.
Before Powell’s statement, Ethereum ETHUSD, was the second-largest cryptocurrency by market cap. It has lost about 15% of its value. Falling as low as $1,422 to its lowest point since July. The response was somewhat different from how markets responded to Powell’s recent public comments made earlier in the summer, which they choose to take, somewhat imaginatively, as a potential that the Fed might switch its focus to recession concerns, driving stocks higher.
Asia’s markets were active on Monday. The dollar increased when the U.S. yields increased, particularly at the short end. The Japanese yen’s increase of 0.83% (USDJPY) and the Chinese yuan’s leap to 6.9 per dollar (USDCNY) were the main drivers of the dollar’s increase. This was not unexpected because the People’s Bank of China and the Bank of Japan are the only two large central banks still singing from the monetary easing hymn book.
