Crypto wrap: Expect high volatility as inflation remains a concern, experts say
The crypto market remained flat for the past 7 days. Total market capitalization (m-cap) fell marginally from $1.04 trillion on August 19 to $1.03 trillion on Friday. Bitcoin, the largest cryptocurrency after m-cap, fell nearly 2 percent compared to Aug. 19 and traded at $21,446, according to data from coinmarketcap.com.
Ethereum, the second-largest cryptocurrency, fell nearly 5 percent in the same period to trade at $1,661. However, some other coins like XRP and Shibu have made gains in the last 7 days.
“Ripple (XRP) and Shiba Inu (SHIB), highlighted a surge in whale transactions to a three-month high. Traditional financial firms continued to bring up XRP as a potential ‘payments opportunity’, and SHIB saw a surge of new owners amid social peaks. media mentions,” CoinDCX’s research team told Business Standard.
also read: Explained: Ethereum is set for mega ‘merger’ to become more energy efficient
The volatility in the crypto market comes at a time when stock markets showed high volatility globally. The Nasdaq has fallen 2.5 percent in the past week. Japan’s Nikkei index was down more than 1 percent. The Sensex was at a 0.4 percent lower level than it was at the start of the week, according to market data.
Experts have attributed this to high inflation driven by the price increase.
“The correlation between equity and debt always increases in times when growth is driven by inflation-driven asset prices and not real growth. This is why both equity and debt markets take a beating at the same time,” Vivek Iyer, partner, Grant Thornton Bharat said.
“Investors want to keep more cash now rather than lose value further from their ordinary holdings. As a result, we do not see redeployment to crypto as a possibility. Furthermore, existing investors holding crypto will either want to hang on or exit.” Iyer further said.
Inflation has remained above the threshold limits set by central banks around the globe. In the US, Fed Chair Jerome Powell has repeatedly stated that they will continue to raise benchmark interest rates to bring them under control. UK inflation broke the 10 per cent mark after more than 40 years.
What can you expect in the coming days?
“BTC has been constantly trying to keep the price above the USD 21,000 support level. If buyers can come back into the market, we may see BTC rise to USD 22,000 soon. The second largest cryptocurrency, Ethereum, remains bullish as the price is above the key support level at $1,655. ETH has yet to gather enough strength for either growth or decline. However, $1,700 now plays an important role for bulls,” said Edul Patel, CEO and co-founder of global crypto investment platform Mudrex.
However, experts reiterated that the crypto market will continue to see high volatility in the coming days.
“At the very least, we expect the crypto space to exhibit range-bound volatility between 5 and 10 percent,” Iyer said.
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