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Recently the crypto market has seen one of the hardest hits that led it to move into deepest dips after a long time, although recovering but still in the loss.
After the discouraging report on federal inflation released on Wednesday morning that followed, bitcoin, ethereum, and many other cryptocurrencies have seen a decline in their valuations. This continued the trend that has been playing since the digital currencies hit their all-time high last year.
By mid-morning of Wednesday, Bitcoin stood at around $31,332, but it had also slipped around $30,000 that too for the second time in recent weeks and was also down some 17% last week. On the same day, Ethereum slipped to about $2,166, but after a few hours rebounded to $2,360, the smart contracts enabled blockchain network’s native token has been down by 16% in the past seven days.
Crypto assets have declined with stock futures following the report of consumer prices by the US Department of Labor for April, which jumped 8.3%. This was slightly more than what economists expected Dow Jones polled. These situations frightened investors and led them to exit from these sorts of risky assets, including cryptocurrencies. Crypto assets remain in high correlation with indices like S&P 500 and Nasdaq Composite.
Venture associate at AscendEx, Michael Rinko, told CNBC that the crypto market remained under pressure for a while now. The Federal Reserve keeps hiking the interest rates, so equities are getting down, and hence crypto has also followed it along, which created a lot of fear in the market. The highest peaks that bitcoin and ethereum attained late last year currently are trading down by 50%, where these digital assets were trading at about $60k and $4.8K, respectively.
As per the research of Glassnode, a blockchain analytics firm, only 60% of bitcoin investments remained to generate profits when the cryptocurrency price was around $33,600. The other 40% of the investment has sunk underwater as the price of bitcoin has gone to tank even lower than this, and currently floating somewhere around $30,812, there is a huge chunk of investments lying in the red. Glassnode, referring to the total investments after becoming unprofitable last month by only 15.5%, said the profitability decline is the fourth most severe in the last three years.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
