Bitcoin, the biggest cryptocoin by market cap, has sunk close to its low for 2022. Bitcoin is threatening to go below $18K following a selloff triggered by the drop in the cryptocurrency market cap to below $1 trillion. Since September, Bitcoin has shed over 6% of its market cap. The crypto market cap is also in a downward spiral.
Optimism over Merge
Despite the general downturn in the crypto markets, some hope remains for the upcoming Ethereum Merge. Optimists believe it could boost capital flows in Ethereum and other crypto assets. However, despite the optimism, Ether has also seen a downward trend even as the Merge gets closer. From September 6, the price of Ether has dropped nearly 6%, in line with the general market trend.
Optimists also point out that in the last crypto winter; the price of Bitcoin was $3000. Thus, they note that if you compare trough to trough, the trend is upward in the long term. However, even more worrying is that the market dominance of Bitcoin has dropped below 39%. That level was last seen in January 2018.
Peter Schiff, a well-known Bitcoin bear and the chief executive officer of Euro Pacific Capital, expressed a great deal of pleasure in posting this information online. The gold bug made the observation on September 6, 2022, that the level of $20,000 in Bitcoin represented an artificially low point in the cryptocurrency’s price. His advice to investors was to get off the sinking ship as soon as possible.
He noted that Bitcoin was falling; it had fallen to 38.1% in terms of market dominance. Schiff pointed out, “Competing with almost 21,000 other intrinsically worthless digital tokens, NFTs, and #crypto related equities is taking a toll.” According to Schiff, even if BTC was scarce, its alternatives were not.
Macro-Economic Market Factors to Blame
Rising real estate interest rates, used as a mark of rising borrowing costs, are placing a strain on high-risk assets, including crypto. The fall in BTC prices is taking it nearer the $17,600 mark, which is the 2022 low for BTC achieved in June 2022. The current macroeconomic factors are unlikely to change, placing even more pressure on high-risk assets. As a result, many financial experts predict that BTC could drop even lower.
The strong economic data in the US is the main source of this drop. It shows that the Fed’s hawkish stance is warranted. In a report by CNBC yesterday, it was noted that the PMI figure for August came in at 56.9, which was better than expected. It could give the Fed more room to hike rates without fear of triggering a recession.
Are Bear Markets An Opportunity to Invest
As the crypto market has shown in the past few years, dips are an opportunity to invest. Investors need to ask themselves what their priorities are during a bear market. Knowing that the market will eventually recover after a dip can help one to make informed investment decisions. If you only invest when the market is up, you will soon learn that you often miss the mark.
