Crypto m-cap takes back Mt 1 trillion dollars. Is it another dead cat bouncer?
According to the data from Coingecko, the total market capitalization of digital tokens was recorded at around $1.01 trillion as of 1:30 PM IST on Tuesday, after rising more than 6 percent in the last 24 hours.
Bitcoin rose 7 percent to regain the $20,000 mark, while Ethereum jumped on similar lines and flirted with $1,400 levels. These two symbols contribute over 55 percent to the total crypto cap.
Meanwhile, altcoins including Terra’ Luna Classic zoomed around 50 percent, while Uniswap gained 18 percent. Stepn, Polkadot and Aave also got up to 14 percent.
Despite the Dow Jones slipping into bearish territory amid fears of a recession, the crypto market has shown strength.
Kumar Gaurav, founder and CEO, Cashaa, said cryptos are also in the bear market, as many top tokens are trading steeply below their yearly highs. “Not just cryptos, all asset classes are facing the heat of the bear market,” he warned.
However, Edul Patel, CEO and co-founder of Mudrex, believes that the global crypto market experienced a surge due to a massive influx of capital. “A break in the dollar rally could also be a reason for the crypto strength today,” he added.
A dead cat bouncing on cards?
A dead cat bounce is seen as a continuation pattern in technical analysis as a rally that may initially appear to reverse the current trend, but is quickly followed by a continuation of the price decline. However, experts believe that things could improve if the tokens can hold above key levels.
Abhijit Shukla, Founder and CEO, Revolution Games said that this rally is not supported by fundamentals and is being undone by a downward price trend. “Dead cat litter normally only lasts a few days,” he added.
Bitcoin has come back from the dead more than six times in 13 years. Until the last node is running, it is not dead. To understand how Bitcoin functions through the Satoshi Nakamoto white paper, Cashaa’s Kumar Gaurav said.
Is the worst over?
Experts believe that if there is an economic recession, markets are likely to remain dull and winters could be prolonged. However, cryptos can recover and bounce back quickly.
Shukla said that due to the increased participation, more people would be affected by the crypto winter, while Gaurav said that liquidity remains on the downside during the economic turbulence.
On the other hand, market participants believe that the market has been slow for some time, and investors may have buying opportunities in the longer term.
With uncertainty surrounding macroeconomic factors such as rising inflation and fears of a recession, cryptos and stocks have been going through winters as investors move away from riskier assets, Patel of Mudrex said.
