Investor sentiment falls as crypto market loses $100 billion
The crypto market has now been put under another challenge. Over the past 24 hours, bitcoin prices have fallen around $2,000, causing the crypto market to lose a significant amount of value. As it stands, the crypto market cap is down more than $100 billion and is now dangerously close to falling below $1 trillion again. This has expectedly affected market sentiment, and triggered more fear in the market.
The market turns to fear
The crypto market had seen some improvement with the anticipation surrounding the Ethereum merger. But as the excitement has subsided, the market has started to see a drastic correction in price. Bitcoin had hit $25,000 at its peak this past recovery cycle. However, it has since lost most of those gains.
With this, crypto market sentiment recovered some time after bitcoin began its rally. At its highest point, the Fear & Greed Index has a score of 42, the highest point in four months. This put it as close to greed as it has been, but the market had other ideas.
The price of bitcoin had fallen back below $22,000 and with it market sentiment had fallen. It finished Thursday with a low score of 30, putting it well back in fear territory. The pullback is reflected in the crypto market, falling from $1.1 trillion to around $1 trillion at the time of writing.
Crypto market cap losses $100 billion | Source: Crypto Total Market Cap on TradingView.com
As fear has seeped back into the market, investors are more cautious about investing in the crypto market. Perp traders had shown market fatigue last week, causing bitcoin funding rates to fall below neutral. Now the rest of the market is following suit.
Recovery in the crypto market?
With the market only just beginning to retrace its steps, it is likely that the correction is not over. Such corrections are expected when the market grows so much in such a short time. This helps prices adjust to values that reflect their current market condition.
This means that bitcoin’s price may still have some to fall. Currently, it is speculated that the bottom has been established at the price of $17,600, so bears will try to test the support at this point. Historical movement also supports such movements as were done with previous bear markets.
In addition, the weekend is already here, and it is a period known for low liquidity. This means that it is likely that bitcoin will continue to trend lower through the weekend. If Bitcoin’s price falls below $21,000, the crypto market will fall below $1 trillion.
Featured image from Coinmama, chart from TradingView.com
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