The most popular saying in the currency circle recently, in order to resist the highest inflation level in 40 years (8.6%), I started to speculate on coins, and now I lose 8.6% every day. Although this is a joke, it basically reflects how badly the digital currency has fallen this year.
The U.S. CPI increased by 8.6% year-on-year in May, and the core CPI increased by 6% year-on-year, also higher than expected. In terms of sub-items, prices of almost all important items are increasing, indicating that the endogenous driving force of inflation is strong. If the CPI in June continues to rise at the current month-on-month growth rate, the inflation level will be even higher. This also means that the pace of interest rate hikes by the Federal Reserve may be accelerated, and the tighter monetary policy will increase the downward pressure on the economy and increase the probability of economic recession. Affected by this, almost all risk assets are going down, and the currency circle is the first to bear the brunt.
In early trading on Monday, extending the weekend’s decline, Bitcoin approached $25,000 and Ethereum broke $1,400, hitting a new low since March 2021.
If it breaks below the higher end of the $20,000 range, it could quickly drop to the 200-week moving average at $22,000, or even the 2017 high of $19,511, analysts said.
Vijay Ayyar, vice president of corporate development and international at cryptocurrency trading platform Luno, said the bearish sentiment could continue into the week, with bitcoin typically falling more than 80 percent and altcoins more than 90 percent if you look back at previous bear markets. If the situation continues, Bitcoin prices will be much lower in the next month or two.
Since the beginning of this year, almost all virtual currencies with a little trading volume have fallen, mainstream currencies have been cut in half, altcoins have been liquidated at every turn, and the stable currency Terra has fallen by as much as 99.99%.
With the continuous decline of the market, the total market value of cryptocurrencies has shrunk significantly. According to CoinGecko data, on June 13, the total market value of cryptocurrencies has shrunk to $107 million, and the gains brought by the bull market that started at the end of 2020 have all been withdrawn. The market value of 2.8 trillion, which peaked in November 2021, has lost more than half. If it continues to fall, the total market capitalization is likely to fall below a trillion dollars.
The slump of cryptocurrencies has spread to many circles. First, the Nasdaq technology index and cryptocurrencies have very similar trends. At present, the Nasdaq has the highest decline among the three major U.S. stock indexes, with a year-to-date drop of more than 27%.
Another thing that is closely related to the currency circle is NFT. A large part of NFT transactions are realized through digital currency, and they are naturally close relatives. When the entire cryptocurrency market shrinks, everyone will panic sell NFTs in their hands and exchange them for cryptocurrencies with more stable value. Since it became popular in August last year, NFT transaction volume has fallen by 95%.
Every time there are two types of people in the bloodbath of the currency circle, one is pretending to be dead and not watching, and I believe that it will rise back sooner or later. Indeed, in the past, every Bitcoin halving or even ankle slashing will eventually reach a new high. The only difference is the length of time. There is another type of constant reflection. For example, some people said this time, how many people who speculate on coins believe that decentralized currencies will become mainstream in the future, and they are basically rushing to get rich overnight, and they increase leverage because of greed. , so every time the liquidation is very miserable.