The crypto market has now been put under another challenge. In the past day, bitcoin prices have dropped about $2,000, which has seen the crypto market lose a significant amount of value. As it now stands, the crypto market cap is down more than $100 billion and is now dangerously close to falling below $1 trillion once more. This has expectedly affected the market sentiment, triggering more fear in the market.
Market Turns To Fear
The crypto market had been seeing some recovery with the anticipation around the Ethereum Merge. But as the excitement has worn off, the market has started to see a drastic correction in price. Bitcoin had hit $25,000 at its peak this last recovery cycle. However, it has since shed the majority of those gains.
With this, the crypto market sentiment recovered for a time after bitcoin began its rally. At its highest point, the Fear & Greed Index has a score of 42, the highest point in four months. This put it as close to greed as it has been, but the market had other ideas.
The price of bitcoin had retraced back below $22,000, and with it, the market sentiment had declined. It closed Thursday with a low score of 30, which put it firmly back in the fear territory. The retracement is reflected in the crypto market, falling from $1.1 trillion to about $1 trillion at the time of this writing.Â
Crypto market cap losses $100 billion | Source: Crypto Total Market Cap on TradingView.com
As fear has seeped back into the market, investors are warier when it comes to investing in the crypto market. Perp traders had shown fatigue in the market last week, causing bitcoin funding rates to decline below neutral. Now, the rest of the market is following suit.
Recovery In Crypto Market?
With the market only just starting to retrace, it is likely that the correction is not over. Such corrections are expected when the market grows so much in such a short time. This helps prices to adjust to values that reflect their current market state.
This means that bitcoin’s price may still have some declining to do. For now, it is speculated that the bottom has been established at a price of $17,600, so bears will want to try to test the support at this point. Historical movement also supports such movements as was done with previous bear markets.
Additionally, the weekend is already here, and it is a period known for low liquidity. This means that it is likely that bitcoin will continue to trend low through the weekend. If Bitcoin’s price falls below $21,000, then the crypto market will fall below $1 trillion.
Featured image from Coinmama, chart from TradingView.com
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