Crypto market hovers above $1 trillion as Bitcoin gains threatened
After rallying in July, gains in the cryptocurrency market appear to have stalled in the early days of August, with the crucial $1 trillion market cap under threat. Although assets such as Bitcoin (BTC) and Ethereum (ETH) have attempted to sustain gains above key levels, the market is not yet out of the woods after the extensive cryptocurrency winter of 2022.
In particular, Bitcoin seems unable to extend its gains above $20,000, a factor that has resulted in fears that the flagship cryptocurrency could retest the level. Elsewhere, second-ranked Ethereum has established a bullish sentiment, especially after announcing the Merge update, an item that seemed to bring hope and confidence to the crypto markets.
Despite the uncertainty of the price movement, the global crypto market cap hovers over $1 trillion. As of Aug. 5, the market capitalization was $1.08 trillion, a slight increase of $10 billion from the $1.07 trillion recorded on July 29, according to CoinMarketCap data.
The market has managed to stay above $1 trillion despite Bitcoin being volatile over the seven days. In particular, Bitcoin’s ability to break away from $20,000 was instrumental in the overall market regaining its $1 trillion capitalization. At press time, Bitcoin was trading at $23,050, falling nearly 3% over the past seven days.
Meanwhile, Ethereum has recorded smaller gains of less than 1% in recent days. In particular, the second-ranked cryptocurrency is among the biggest winners in recent weeks as the community anticipates the transition to Proof-of-Stake (PoS) during the Merge upgrade. At press time, decentralized finance (DeFi) was trading at $1,683.
Fears of inflation are emerging
In particular, the crypto market continues to trade in a high inflation environment characterized by increased interest rate increases. Initially, Bitcoin and the general market had reacted positively to the interest rate hikes, but today’s sideways trading patterns have sparked new fears of skyrocketing inflation.
Analysts have claimed that the positive gains are due to the market’s existing experience with sky-high inflation and interest rates. However, July CPI data and a rate hike could extend the bear market.
Impact of Solana hack
Besides the inflation concerns creeping in, the market has been hit by another hack affecting Solana (SOL) network wallets. According to Solana developers, the root cause of the exploit was compromised private keys “created, imported, or used in Slope mobile wallet applications.”
The hack that affected at least 7,000 wallets recorded a loss of around $4.5 million, leaving the crypto community scrambling to figure out what happened. There have been several theories about who is responsible for the incident.
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