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MarketWatch – BTC, ETH, ADA

22 September 2021 | ZebPay Trade-Desk

The last 2 days have been a bloodbath for the crypto market. The market capitalization of the Crypto space globally is $1.84 Trillion, a 1.24% decrease over the last 24 hours. The total volume of the crypto market is around $134.9 Billion indicating an 8.9% decrease over the last day.

Cryptocurrencies saw major losses these 2 days, falling rapidly in value taking other assets like stocks and commodities with them. Bitcoin reached its minimum since August 7 yesterday with prices touching as low as $42,528. Other major cryptocurrencies also diminished including ETH and Cardano’s ADA which was down more than 3% since the last 24 hours. This crash also affected the major stock indices, putting them in red with Dow Jones Industrial Average, and the S&P 500 index ended Tuesday with 1.78% and 1.7% lower respectively. The commodity market was also influenced which led to the S&P GSCI index closing down at 1.7%.  

A major factor that came up repeatedly was concerns regarding The Evergrande Group, one of the major real estate companies of China. The company is likely to default on its debts, which would lead to the weakening of China’s economy ultimately affecting the global economy.  In the US market, there is uncertainty regarding the Central Bank and when it will begin the process of tapering the current monetary stimulus. The Federal Reserve has started their meeting which will continue for two days and it will be observed by many investors to get to know the future policy moves of the financial institutions. It is said to be the second biggest crash after the crash in May which plunged the prices of Bitcoin and other altcoins after its Tesla announcement.  

Bitcoin is the largest cryptocurrency in the world and has fallen quite badly causing the bulls to give up hope on a history-busting green September. Bitcoin started falling after touching the $50,000 mark and is now much closer to the $40,000 level which now acts as a key support level. It has been argued that Bitcoin is the gold of digital currency, a safe haven asset but the story might be changing as people realize the price of BTC mostly goes down with a broader decrease in risk assets.

The asset’s rally this year seems to be coinciding with the risk-on rally and like stocks the crypto also might be prone to rapid declines in September. Another reason for the BTC declining after China’s announcement of fresh regulations is that investors began dumping their mining equipment. 

Ethereum, the second most dominating asset in the crypto market, suffered worse than its counterparts with heavy losses. It followed the trail of BTC and came tumbling down to $2,676 yesterday from the $4,000 mark. Even though the correlation between the Equity market and Crypto market is argued, it’s hard to ignore the effect they have on each other. There are rumors that the asset price may touch the $2,000 level after the successful breakdown below the $2,954. But there is also talk of bounceback. The 24 price change is about 7.15%. This decline can be attributed to the spillover of the weakness visible in the global equity market in the past weeks. A huge panic took over the market which led to profit-booking by large investors hence leading them to sell across the retail segment. 

Cardano, which recently rose to the limelight occupying the 3rd rank in terms of market cap, followed the trails of its fellow cryptocurrencies and plunged sharply from a 30 day high of $3.10 to almost $2.0. Cardano network has shown a lot of promise, after completion of its much-hyped Alonzo hard fork for it has been able to reach dizzying heights recording +70% and +1200% over the last 90 and 180 days, respectively.

The interview of Gary Gensler’s  U.S Securities and Exchange Commission chairman might have had an impact on the prices of ADA.  The asset has given up almost ⅓ of its value in just weeks. The fall would be reversed as soon as BTC finds support and bounces back. Recently the term “Ethereum Killer” has been trending in google searches indicating the bouncing back of ADA would be much faster. 

WoW Analysis
Change WoW (%)BTCETHADA
%Price-13.59%-19.38%-17.08%
%Volume-11.05%-7.78%-44.18%
%Market Cap0.53%-8.15%-8.15%

In the table above we can see that the prices of the top 3 assets have fallen by large levels since last week due to a sudden spike in volatility.. Bitcoin price fell by almost 14% from last week and now it’s closer to the $40,000 level. ETH was one of the most affected currencies, it plunged by about 19.4% since last Tuesday. And Cardano’s ADA was also hit negatively with its price decreased by around 17% as compared to 15th September. 

The volume speaks the same story. ADA’s volume was the most affected with around 44% decline followed by BTC with around negative 11%. Ethereum volume was least affected, maybe because people were buying in the lows hoping the asset would bounce back to a good price soon and profit is visible around the corner.

The Bitcoin market cap somewhat remained stagnant with a slight increase while both Ether and ADA’s market capitalization declined by approx 8% since the last week. Except for the stable coins, every asset felt this crash but NFTs have already started recovering. Even though it looks grey the clear sky and rainbow would follow soon.  

Before the cryptocurrencies experienced the plunge they also enjoyed a linear rally, markets are supposed to go through such cycles, and soon the asset will be bouncing back. Research points out that the ripple effects of the defaults of Evergrande have caused this crash.

Other reasons could be the ongoing debates over the Washington debt limit which is acting as a stimulant for this week’s volatility. This whole facade led to the “stock market fear index”, the CBOE Volatility Index (VIX) jumping more than 30% since May.  Again the meeting of the Federal Reserve which is supposed to end by today is signaling when the cut of $120 Billion monthly asset purchase program is expected. The crypto market is showing faint signs of recovery but negative news from China’s restrictions and other countries are dampening the investors’ sentiments.

The digital token will bounce back strongly once the dust settles. There is hope for swift and prompt recovery of the crypto market, but when it will happen cannot be predicted. Investors should view the long-term profits of the tokens they hold. Random altcoins should be kept at a bay or it would be a situation of euphoria being created and destroyed often. From this event, crypto investors should learn to be cautious, as most liquide assets tend to bear the effects of global market disruption and crypto cannot be immune to it. Unlike other assets which are bounded by geographical boundaries, Crypto is worldwide and anything happening anywhere could affect the market. So this crypto crash is positive on a fundamental level. 

References:

https://coinmarketcap.com/

https://www.coindesk.com/

https://www.investopedia.com

Disclaimer : This report is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. The Company has prepared this report based on information available to it, including information derived from public sources that have not been independently verified. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein. This report is preliminary and subject to change; the Company undertakes no obligation to update or revise the reports to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Trading & Investments in cryptocurrencies viz. Bitcoin, Bitcoin Cash, Ethereum etc.are very speculative and are subject to market risks. The analysis by Author is for informational purposes only and should not be treated as investment advice

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