Crypto market tumbles amid weakening risk sentiment

4 0 3 w – images.unsplash.com

Cryptocurrencies took a tumble on Tuesday after a steep mid-afternoon selloff. Altcoins led the day’s drop with a 1.3 percent decline.

According to the CoinDesk Market Index (CMI), altcoins like Ripple’s (XRP), Dogecoin (DOGE), Polkadot’s (DOT), Polygon’s (MATIC) and Uniswap’s (UNI) each recorded over four percent of losses in the past 24 hours.

Meanwhile, major tokens like Bitcoin (BTC) and Ether (ETH) declined less than one percent. Bitcoin — the largest token by market capitalization — is still struggling to pass the $30,000 mark. It sells at $29,192 as of writing, 0.59 percent lower than the day prior. Ether declined even lower by 0.85 percent and traded at $1,827.

“Cryptos are sinking as the bond market selloff resumes, sending global bond yields higher as the risk of more central bank tightening grows,” OANDA senior market analyst Ed Moya told CoinDesk.

Looking for catalysts

The cryptocurrency market has stabilized somewhat in 2023, but prices and trading activity remain low. Analysts attribute this to the lack of strong catalysts that could drive buying pressure in the sector.

Besides the Bitcoin lull, major and mid-cap tokens, such as Cardano’s ADA, Solana’s SOL and LDO, have been moving sideways. This lack of volatility suggests that investors are still hesitant to enter the market and that the bear market may continue for some time.

Traders have been turning to meme coins such as Shiba Inu (SHIB) and Pepe (PEPE) in search of volatility, according to data analytics firm Santiment.

“Cryptos are sinking as the bond market selloff resumes, sending global bond yields higher as the risk of more central bank tightening grows,”

Ed Moya, senior market analyst OANDA

As of writing, Shiba Inu has experienced a decline of 2.64 percent, with trading value settling at $0.00001022. However, the coin has risen by 14 percent on the weekly chart, outperforming the gains of many other prominent altcoins.

Some traders have said an ETF ruling could reignite the cryptocurrency market’s volatility. Grayscale Investments and Ark 21Shares Investments are awaiting decisions this week on their applications to sell spot Bitcoin ETFs.

“A potential catalyst for this [uptick] could be the looming ETF news on the shorter term and the halving impact on the longer run,” said Deribit chief commercial officer Luuk Strijers.

Potential bullish run

A recent report by research firm Delphi Digital suggests that the cryptocurrency market is poised for a bull run soon. The report delves into the relationship between Bitcoin’s four-year cycles and broader economic trends, providing insights into potential future developments.

The analysis highlights the cyclical nature of the cryptocurrency market. It identifies patterns in the timing of peak-to-trough bottoms, recovery periods and price rallies. Bitcoin’s cyclical pattern is marked by periods of growth and decline.

These cycles typically begin with Bitcoin reaching a new all-time high (ATH), followed by a sharp decline of up to 80 percent. The market then bottoms out around a year later and begins a two-year recovery period that leads to a return to prior highs. By the end of the cycle, a new all-time high is hit following a year-long price rally.

Bitcoin’s current condition in the market is similar to that between 2015 and 2017. Market trends, economic indicators and historical patterns suggest that there is both increased risk and potential for growth.

As Bitcoin’s halving is coming soon, the report predicted that the token will reach a potential all-time high by the fourth quarter of 2024.