Cryptocurrency Market Capitalization Falls By $16 Billion: What Will Happen Next?
Investors have cooled a bit towards cryptocurrency, as evidenced by the decline in the capitalization of crypto assets last week. Why is the current correlation between Bitcoin and Gold considered a “step back”?
Is the crypto market stagnating?
The last 7 days have been challenging for the cryptocurrency market, despite the presence of bullish impulses and attempts by Bitcoin to re-overcome the $12,000 barrier. The monitoring of market indicators for this period showed that the total crypto market capitalization decreased by $16.7 billion. Losses of large altcoins range from 6 to 12% amid a long pullback in price back.
Bitcoin also could not avoid the loss: the capitalization of the flagship cryptocurrency decreased by 5%. Analysts convince the downward trend in cryptocurrency market performance is driven by several factors. Despite its decentralization, the digital currency market is partially influenced by the sentiment that prevails at the macroeconomic level.
If you look at the traditional financial market, over the past 7 days, there has been an increase in the trading activity of institutional investors. Analysts associate the “revival” in the stock market with the spread of information about positive tests of the vaccine against coronavirus and the approach of medicine a few steps closer to solving this global problem.
Despite the excitement of trading in the stock market, the growth of the S&P 500 index did not become an additional driver for a tangible jump in the price of Bitcoin. As of today, the flagship cryptocurrency continues to correlate positively with Gold and Silver.
What prospects does Bitcoin have?
Further, the dynamics of Bitcoin quotes has several options for the development of events. Some cryptanalysts are convinced that the third halving has not yet manifested itself, and we will see the consequences only a year later, at least. Crypto enthusiasts continue to stand their ground and are confident that the price of Bitcoin will reach the range of 340-720 thousand dollars. These numbers seem unthinkable in the current context of events and the struggle of Bitcoin for $12,000, but they have a right to life.
If we draw a parallel with the 2017 rally, the crypto market today finds itself in significantly different conditions. Price trends are driven by unique factors, such as a pandemic, the printing of “helicopter money,” and the prevailing sentiment in the global political arena.
Analysts predict that investors will soon return to the crypto market, and the current decline in market capitalization is a short-term action. If the US dollar depreciates due to the monetary policy of the Fed, the crypto-asset market could receive a powerful boost to growth thanks to a new influx of investors.