The market cap of digital assets has dropped by more than $500 billion in the last 7 days.
However, Friday’s 10% rebound has given crypto supporters a glimpse of optimism.
The crypto market took a major beating in 2022 amid an uncertain global regulatory environment and the geopolitical situation. But, the intensity of the sell-off increased significantly after the Terra fiasco. LUNA, once known as one of the world’s most valuable cryptocurrencies, lost its entire value within a few days. Amid jittery market conditions, investors pulled out billions of dollars from the market. While Bitcoin plunged below $28,000 on Thursday for the first time in almost 12 months, the situation across the altcoin market was even worse.
But, the crypto crash is nothing new for those who held their assets in the market corrections of 2017 and 2020. Throughout its history, the crypto market has emerged as the winner for most of its long-term holders. Is the situation different this time? Well, if we look at the trend today, it seems like the recent sell-off was one of many we have seen before. On Friday, crypto bulls made a strong comeback with a market rally of more than $150 billion. Bitcoin and Ethereum spiked by over 10%, but altcoins jumped by nearly 25%.
Crypto bulls termed the latest rebound as a sustainable rally while critics think that it is nothing more than a dead cat bounce. Leading names in the crypto ecosystem believe that the long-term potential of Bitcoin and other digital currencies is still massive, however, investors must stay away from the market during extremely volatile conditions. “The situation on the market is still tense, therefore, traders should brace themselves for increased volatility in the coming days,” Farah Mourad, the Senior Analyst at XTB MENA, said.
According to Mourad, the market has stabilized for now, but lately, the crypto assets mimicked the stock market movements, something that has changed in the growing digital asset ecosystem.
LUNA Crisis
The crash of LUNA will be remembered as one of the biggest events in the history of the cryptocurrency market. Farah believes that the LUNA crash jolted the entire market and fueled uncertainty among retail and institutional investors.
“The collapse of Luna ultimately poses no threat to the fundamentals of other projects that have proven their worth, although it may hurt market sentiment at least in the short-term. This is typical of periods of cyclical downturns, during which a sizable portion of investors look for opportunities and choose to accumulate cryptocurrencies in anticipation of another bullish cycle,” Farah added.
A ‘Cautious’ Opportunity
Analysts mentioned that for those who missed the crypto rally, the recent market correction is like a crypto sale. However, it is more like a ‘cautious’ opportunity than going ‘all in’.
"With major blue-chip cryptocurrencies such as BTC and ETH at major support and massively oversold according to their 4H RSI, traders and investors alike will naturally jump in and buy the dip. The markets might have priced in the rate hikes sooner, and we are less likely to see more carnage in the markets. If all goes well, the market should be poised for a rally. However, with Powell's recent comments stating that inflation remains a priority, it does not seem like we are going to get a policy pivot anytime soon. This is why we have to remain cautious,” Whitney Setiawan, the Research Analyst at Bitrue crypto exchange, commented.
The crypto market took a major beating in 2022 amid an uncertain global regulatory environment and the geopolitical situation. But, the intensity of the sell-off increased significantly after the Terra fiasco. LUNA, once known as one of the world’s most valuable cryptocurrencies, lost its entire value within a few days. Amid jittery market conditions, investors pulled out billions of dollars from the market. While Bitcoin plunged below $28,000 on Thursday for the first time in almost 12 months, the situation across the altcoin market was even worse.
But, the crypto crash is nothing new for those who held their assets in the market corrections of 2017 and 2020. Throughout its history, the crypto market has emerged as the winner for most of its long-term holders. Is the situation different this time? Well, if we look at the trend today, it seems like the recent sell-off was one of many we have seen before. On Friday, crypto bulls made a strong comeback with a market rally of more than $150 billion. Bitcoin and Ethereum spiked by over 10%, but altcoins jumped by nearly 25%.
Crypto bulls termed the latest rebound as a sustainable rally while critics think that it is nothing more than a dead cat bounce. Leading names in the crypto ecosystem believe that the long-term potential of Bitcoin and other digital currencies is still massive, however, investors must stay away from the market during extremely volatile conditions. “The situation on the market is still tense, therefore, traders should brace themselves for increased volatility in the coming days,” Farah Mourad, the Senior Analyst at XTB MENA, said.
According to Mourad, the market has stabilized for now, but lately, the crypto assets mimicked the stock market movements, something that has changed in the growing digital asset ecosystem.
LUNA Crisis
The crash of LUNA will be remembered as one of the biggest events in the history of the cryptocurrency market. Farah believes that the LUNA crash jolted the entire market and fueled uncertainty among retail and institutional investors.
“The collapse of Luna ultimately poses no threat to the fundamentals of other projects that have proven their worth, although it may hurt market sentiment at least in the short-term. This is typical of periods of cyclical downturns, during which a sizable portion of investors look for opportunities and choose to accumulate cryptocurrencies in anticipation of another bullish cycle,” Farah added.
A ‘Cautious’ Opportunity
Analysts mentioned that for those who missed the crypto rally, the recent market correction is like a crypto sale. However, it is more like a ‘cautious’ opportunity than going ‘all in’.
"With major blue-chip cryptocurrencies such as BTC and ETH at major support and massively oversold according to their 4H RSI, traders and investors alike will naturally jump in and buy the dip. The markets might have priced in the rate hikes sooner, and we are less likely to see more carnage in the markets. If all goes well, the market should be poised for a rally. However, with Powell's recent comments stating that inflation remains a priority, it does not seem like we are going to get a policy pivot anytime soon. This is why we have to remain cautious,” Whitney Setiawan, the Research Analyst at Bitrue crypto exchange, commented.
Bilal Jafar holds an MBA in Finance. In a professional career of more than 8 years, Jafar covered the evolution of FX, Cryptocurrencies, and Fintech. He started his career as a financial markets analyst and worked in different positions in the global media sector. Jafar writes about diverse topics within FX, Crypto, and the financial technology market.
Crypto Mining Company Argo Reduced Losses by 85% in 2023
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
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20-22 MAY 2024
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Looking to expand your network in #Africa?
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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