In its fifth consecutive week of decline, over $1 trillion has been lost at the crypto market in what users have termed, “a crypto winter.”
Data collated from Coinglass, a cryptocurrency futures trading and information platform, shows that over 239,000 traders had their positions closed over the past 24 hours, with liquidations totalling roughly $874 million.
Coinbase showed that Bitcoin fell as low as $34,042.78 on Saturday, a drop of 7.2 per cent. Other digital assets also slid, with Ethereum down 12 per cent, Solana and Cardano each fell at least 17 per cent.
Ethereum, the second largest cryptocurrency by market capitalization, which reached $4,878.26, its all-time high on November 10, has recorded a drop of 47.7 per cent.
The downward spiral at the crypto markets reflects the state of the stock market as the United States Federal Reserve moves to withdraw the stimulus from the market and curb inflation.
“If central banks are moving to get a handle on inflation, then that damages the argument that investors should hold bitcoin as protection against price rises,” UBS analysts said.
The Biden administration is preparing to release an initial government-wide strategy for digital assets and task federal agencies with assessing the risks and opportunities that they pose.
Increased regulation is another reason analysts believe that the crypto market is crashing.
China has completely banned all crypto-related activities and Russia’s central bank has called for a total ban over the use and mining of cryptocurrencies on Russian territory, claiming the digital currency poses a risk to “financial stability and monetary policy sovereignty.”
In spite of the current slump in the market, analysts at Goldman Sachs predict Bitcoin could reach $100,000. The investment firm said bitcoin currently makes up about 20 per cent of the so-called “store of value” market which, in theory, should not depreciate much over a long period of time.
Goldman Sachs believes bitcoin could eventually make up 50 per cent of the store of value market, which could push bitcoin about 18 per cent higher annually for the next five years to top the $100,000 level.
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