Key Insights:
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With BTC’s price above the $30,000 mark, market confidence seemed to return.
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Most of the top altcoins were trading in the green on a renewed market momentum.
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The recent short-term gains seem to be temporary as the market could see further downside.
Most cryptocurrencies traded higher as Sunday approached with a wind of fresh air for crypto investors. While it wasn’t a full-blown recovery, markets headed towards gains, as bearish sentiment waned.
Over the last six months, the cryptocurrency market reached as high as $3 trillion and dropped to as low as $1.2 trillion. In the last half a year, the cryptocurrency market cap has lost $1.9 trillion; these losses are bigger than those witnessed during the 2007’s subprime mortgage market crisis.
The high losses and higher trading volumes have propelled fears of crypto market risk spilling over across traditional markets hurting stocks and bonds. The same also indicates the increased correlation in the high-risk and traditional finance markets.
A return of short-term buyers, as the cryptocurrency market cap inches close to the $1.5 trillion mark, shows optimism in the market. However, the return of traders isn’t indicative of larger market recovery as technicals present limited upside in the short term.
Nonetheless, with the global crypto market cap returning to the $1.30 trillion mark at press time, noting a 4.73% increase over the last day, the same pointed towards a short-term recovery.
So, let us take a quick look at how the market reacted over the last week and where it could go, moving forward.
Bitcoin staging a recovery?
The bitcoin (BTC) price dropped to the lows last seen in late 2020, amid the COVID-19 crisis. Recently, after a storm of Federal Reserve interest rate hikes, the scaling back of its massive $9 trillion balance sheet, and a huge $18 billion stablecoin meltdown, the same brought down the larger crypto market cap and the top crypto asset.
Bitcoin’s price fell to as low as $25,800, but pressure from bulls ensured a short-term recovery back to the sub-$29,000 zone. At the time of writing, the top cryptocurrency, traded at $30,284, noting a 4.11% price rise, over the last day.
While the BTC gains instilled some confidence in the market participants, analysts believed that market gains wouldn’t sustain for long with volatility still high. Data analytics site, Glassnode, tweeted that Bitcoin dropped below $30,000, as inflation fears and the Fed’s readiness for “short-term pain” rattled markets.
Notably, BTC was down by 58% from its all-time high price, while SPX was down by 18%, NDX was down by 30%, and US bonds have fallen by 15% from their ATH.