Another challenge has been placed on the crypto market. The crypto market has lost a lot of its value as bitcoin prices dropped by $2,000 in the last day. At the moment, crypto market capital is at dangerously low levels of $100 billion. This is expected to have an adverse effect on market sentiment and triggered more fear.
The Market turns to Fear
The Ethereum Merge was a catalyst for some price recovery in the crypto market. However, as excitement fades, the price has begun to fall. Bitcoin reached $25,000 during its last recovery cycle. It has lost the vast majority of these gains.
This was the moment when crypto market sentiment started to recover after the rally. At its highest point, the Fear & Greed Index has a score of 42, the highest point in four months. It was as close as possible to greed, however the market saw other possibilities.
Bitcoin’s price had fallen below $22,000 and the sentiment in markets had dropped. It ended Thursday’s trading session with a 30th-place score, which placed it back in fear territory. This is evident in crypto markets, which fell from $1.1 trillion down to $1 trillion as of the writing.
Losses of $100 billion in crypto market capital | Source: Crypto Total Market Cap on TradingView.com
Investors are more cautious about investing in crypto markets because of the fear that has seeped into them. Bitcoin funding rates fell below neutral last week because of fatigue from perp traders. The market now follows their lead.
How can we recover from the crypto market crash?
The market is just beginning to recover, so it’s likely the correction will not be over. These corrections are normal when the market is so volatile. This allows prices to adapt to market conditions.
This means that bitcoin’s price may still have some declining to do. The bottom is thought to be $17,000. Bears might want to explore this support point. This is similar to what happened in bear markets before.
Also, it’s already weekend, which is well-known for having low liquidity. It is probable that bitcoin will trend lower throughout the weekend. If Bitcoin’s price falls below $21,000, then the crypto market will fall below $1 trillion.
Featured image by Coinmama. Chart at TradingView.com
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