The macro market has influenced the price of crypto to a great extent in the past few months as compared to a year ago. It should come as no surprise that some of these companies, which are heavily involved in the macro market, have also increased their investments in cryptocurrencies such as bitcoin. So, while the macro environment affected these companies, crypto was affected. The effect still persists.
loss flow to crypto
There have been some major developments regarding the economy in the last one week. Fed Chairman Jeremy Powell said the market would be in for a lot of “pain” as the government tried to bring inflation under control. The market had made such dire predictions and ran with them, causing huge losses in the entire stock market.
By the end of Sunday, a loss of $ 1.25 trillion was recorded in the stock market. For comparison, this number is much larger than the entire crypto market cap. The impact of Powell’s speech will continue to be felt, with the Nasdaq losing 4% and the S&P losing 3.3%.
Total market cap below $950 billion | Source: Crypto Total Market Cap on TradingView.com
The spillover from losses was quickly felt in the crypto market. The cryptocurrency lost nearly $100 billion in the same time period, taking it once again below the $1 trillion mark. The inflation rate didn’t help either, as it was reported at 2%. Furthermore, there is speculation that there is a high probability that there will be a 75-basis point rate hike in September.
At the time of writing, the total market cap of the cryptocurrency has now reached $931 billion, having hit a local low of $919 billion early Monday.
looking to the future
There has been a slight correction in the cryptocurrency market over the past few hours, but as the trading week opens, there is still uncertainty as to which way the market will swing. Powell’s speech came just before the weekend, not giving the stock market enough time to absorb and regulate the news. This regulation is expected to happen this week.
As far as the expected rise in interest rates is concerned, as before, it is likely to trigger another downtrend as investors exit the market. This trend is already being seen in the crypto market, where large investors are exiting digital assets like bitcoin, leading to double-digit outflows.
September has also historically been a red month for the crypto market. A good example was the market crash that occurred in early September 2021. So if the market holds true to the trend, more losses are likely to come around September.
Featured image from Finance Magnated, chart from TradingView.com
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