Other than dollar-pegged Tether and USD Coin, as many as seven of the top-10 cryptocurrencies have given up 25 per cent on their value in the last one month, with all of them posting double-digit cuts.
Bitcoin and Ethereum have shed 13-17 per cent each, whereas Dogecoin and XRP have eroded up to 25 per cent of investors’ wealth. Even the skyrocketing Solana has crashed down to $155 from $210 levels.
The recent fall has turned crypto investors anxious as the digital token cart has turned volatile recently. Investors are worried about wealth erosion. The latest reports over market meltdown in the global media are adding to their woes.
The crash in Bitcoin last week took place soon after its debut as a legal tender in El Salvador, said Sharan Nair, Chief Business Officer, CoinSwitch Kuber. “We are seeing reactions to demand, supplies and developments. This is the fundamental characteristic of cryptocurrencies,” he added.
Analysts said it is a mixed market right now. Many currencies have hit new lifetime highs, they pointed out.
Hitesh Malviya, founder, itsblockchain.com, said September has always been a bearish month for Bitcoin. “$43,000-45,000 is a key support level for Bitcoin and losing this support will make a path for price to revisit the next support block which is at $36,000-39,000. It is quite possible for Bitcoin to revisit last week’s lows again,” he added.
Other experts, however, did not rule out the expectations of another market meltdown. Though, it’s too early to tell, they added.
Johannes Schweifer, CEO of Liechtenstein-based CoreLedger, a blockchain startup, said there is always a possibility of a meltdown. “Bitcoin has shown in the past to be capable of surprise crashes and surprise growth into price levels never seen before,” he added.
There has been a number of news coming out that potentially puts crypto in the negative limelight. At the same time, key players are buying into crypto as well as crypto infrastructure, like MasterCard’s acquisition of blockchain-based analytics start-up CipherTrace.
According to the market watchers, the only strategy is to keep an eye on the global market and developments and then take an educated investment decision.
“One can never precisely predict what could be a good time or a bad time in the crypto market,” said Nair of CoinSwitch.
El Salvador might have been an important trigger, added Schweifer. For the first time in history, a country has shown that the US dollar is not the one and only currency. “Adopting Bitcoin as an alternative might have caused some uproar and feelings of vengeance,” he added.
Malviya said: “It’s a good time to buy Bitcoin and Ethereum for the long term, but for short-term trades, one needs to wait because Bitcoin is currently trading close to key support level and one should avoid leveraged positions.”
