The valuation of the crypto market has dropped by $50 billion within a week, from $300 billion to $250 billion, led by the fall of Bitcoin.
In the past 24 hours, the Bitcoin price fell from $7,250 to $6,950, extending its loss on August 4 and recording another 4 percent loss on the day.
Last week, the volume of Bitcoin hovered around at $5.5 billion while the volume of the entire crypto market exceeded $18 billion. As of August 5, the volume of Bitcoin remains below $4.1 billion and the daily trading volume of the entire market has declined by $7 billion within a seven-day period.
Often, when the price and the volume of Bitcoin fall, the demand for US dollar-backed stablecoin Tether (USDT) tends to increase, as investors move towards hedging the value of cryptocurrencies to that of the US dollar.
However, in the past 24 hours, the volume of Tether has also declined from around $3 billion to $2.5 billion, suggesting that overall market activity in the cryptocurrency market has dropped over the last several days.
The struggle of the crypto market and the lack of momentum from major digital assets come in a period in which the cryptocurrency sector has seen some of the most positive developments in its history.
Earlier this week, the world’s largest stock market NYSE and coffee retailer Starbucks disclosed their collaborative effort to increase the usability of digital assets globally, as a recognized and legitimate payment method. In the long-term, the forward-thinking approach of Starbucks and NYSE is expected to drastically improve the adoption of cryptocurrencies like Bitcoin and Ethereum by merchants.
Despite these positive events, along with the resurgence of Bithumb, a major cryptocurrency exchange in South Korea, the crypto market is continuing to demonstrate a lack of demand and volume.
It is evident, based on the sudden movements in the price of Bitcoin which do not reflect the positive developments in the cryptocurrency sector, that most of the major drops in the past month were caused by movements in the over-the-counter (OTC) market.
In its latest report, as CCN.com reported, UBS, the Swiss multinational investment bank, emphasized that Bitcoin is too unstable in its current form to experience mainstream adoption.
“Our findings suggest that Bitcoin, in its current form, is too unstable and limited to become a viable means of payment for global transactions or a mainstream asset class,” the report of UBS obtained by Bloomberg read.
If BTC and other major cryptocurrencies continue to show signs of manipulation and abnormal behaviors, the US Securities and Exchange Commission (SEC) could potentially reject BTC exchange-traded funds (ETF) and public instruments based on digital currencies due to their high volatility and manipulated markets.
Some regulated financial institutions including NYSE and Nasdaq have reaffirmed their support toward BTC and the growing market of cryptocurrencies, which could stabilize the market in the mid-term.
Featured image from Shutterstock. Charts from TradingView.
Last modified: March 4, 2021 4:07 PM