Crypto Market Returns Plunges Into The Negative, Here’s Why

In a matter days, the crypto market saw its gains disappear in the past month. While the crypto market was booming, the gains of cryptocurrencies within the space were double-digit and the investor sentiment was rapidly increasing. However, with bitcoin’s rejection at $25,000, the entire market had seen a swift downtrend. Investor sentiment is now worsening and digital assets that had experienced periods of growth are in the red.

Crypto Indexes Lost Gained Value

All indexes within the space experienced tremendous growth at the start of August when crypto markets were recovering. These gains were most notable in the Mid Cap and Small Cap indexes. This highly volatile asset had surged high, as investors in crypto were increasing their risk appetite.

The market is now back in the red as hype about the Ethereum Merge fades and the month winds down. The Small Cap Index suffered the largest losses last week. This is normal in such an environment. Its current returns are at -85. With 8% losses, the Mid and Large Cap Index followed the same path. 

Bitcoin managed to hold its value slightly better than the other two, but not by much. The losses recorded by the pioneering digital asset were 7% in that same time frame, a stark contrast with the overall gains of 12% in August.

crypto market profits

 Source: Arcane Research| Source: Arcane Research

What is the Reason for this?

When one compares the market in August to today, it’s easy to see the root cause of the problems. Investors began to take greater risks when prices fell and bullish sentiment grew.

Investors have lost their faith in the market and are now less inclined to take on risks after the dump. This decreased willingness to accept risks led investors to run for cover. Market participants began moving funds away from volatile cryptocurrencies to more stable alternatives.

Crypto total market cap chart from

Global market cap of $1.022 trillion| Source: Crypto Total Market Cap on

This resulted in stablecoins taking more market share away from Ethereum assets like Bitcoin. The trend was similar to that seen in July prior to the pump. One difference is that Bitcoin is moving less than it was previously.

This bearish mood will likely continue unless there’s a substantial increase in market sentiment. Stablecoins are expected to continue winning in these markets. USDT, USDC and BUSD increased their market shares by 0.77% and 0.50% respectively in the past week.

Featured Image from Forkast News. Charts from Arcane Research and

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