Crypto investors have been witnessing turbulent market conditions for the past few days. After dipping to a three-month low, Bitcoin and major altcoins have been struggling to recover, with some even knocking Tether’s USDT stablecoin off its $1 peg. With the Federal Reserve adopting a hawkish stance on monetary policies and halting interest rate hikes for the first time in 14 months, market jitters have been compounded by regulatory concerns and issues surrounding Tether.
BTC recently traded around the $25,239 mark, mostly flat over the past 24 hours. In contrast, Ether, the second-largest cryptocurrency by market cap, and Tether’s USDT experienced similar sluggishness. Falling liquidity has been pointed out as one of the reasons for these market fluctuations. Riyad Carey, a research analyst at Kaiko, commented that Tether’s depegging significantly rattled markets considering its dominance over recent months.
On the other hand, the U.S. Securities and Exchange has named MATIC, the token of smart contracts platform Polygon, among 19 cryptos in their lawsuits against giants like Binance and Coinbase. This led to MATIC plunging over 5%. Moreover, the CoinDesk Market Index also reported a 3% drop, indicating the decline in overall market performance.
While cryptocurrencies continue to struggle, U.S. equities have gained some momentum, driven by promising economic indicators such as increased consumer spending reports. This decoupling of crypto and equity markets further highlights the underlying uncertainty in the crypto space.
Vineeth Bhuvanagiri, Managing Director of EMURGO Fintech, compared the current market climate to 2019, when ups and downs were prevalent within a specific range. He noted that most market participants are now focusing on survival until the macro scenario turns and volatility subsides. Furthermore, Bhuvanagiri commented that challenges in the banking sector, rate hike uncertainties, and declining economic growth could continue to unsettle crypto markets.
Despite these concerns, it is essential to remember that the crypto market has exhibited resilience in the past. The DeFi summer of 2020 saw a significant shift, and it remains possible that the market will overcome current challenges and continue to grow. However, with various external factors influencing the market, investors need to tread carefully and adopt a long-term strategy during these uncertain times.
Source: Coindesk
