Today, the cryptocurrency market saw a decline, with the total market capitalization dropping from $3.3 trillion to $3.15 trillion over the weekend. This translates to a loss of $150 billion in just three days.
During this period, Solana (SOL) experienced the most significant drop, losing 15% of its value and falling below $170. XRP also saw an 8% decline but remained above $2.5.
On the other hand, Bitcoin (BTC) recorded a decrease of less than 3%, while Ethereum (ETH) only retracted by 2%, indicating relatively strong performance despite the overall market weakness.
The Impact of LIBRA on Market Sentiment
The cryptocurrency market has been relatively quiet due to macroeconomic uncertainties, exacerbated by the negative impact of the LIBRA meme-coin ‘scam’.
QCP Capital, a crypto options trading desk, commented on the daily market performance, noting,
“BTC dominance has reached around 60%, hitting four-year highs, as Ethereum (ETH) and other alternative coins continue to lag behind. The recent scandal involving the $LIBRA ‘rug pull’ and Argentinian President Javier Milei has further soured sentiment towards alternative coins and meme coins.”
Moreover, Bitcoin’s potential for growth has been limited since the Federal Reserve’s hawkish stance on interest rates in January.
Federal Reserve Governor Patrick Harker recently reiterated the hawkish position, advocating for maintaining stable interest rates until inflation is under control.
Market pressures have kept Bitcoin below $100,000 for nearly two weeks, with Bitcoin Dominance (BTC.D) surpassing 60%, hampering the recovery of alternative coins.
Interestingly, analysts like Jamie Coutts from Realvision predicted the likelihood of another market downturn before Bitcoin sees a rebound.
“We have seen significant protocol values drop by 50-80%. A few weeks ago, we experienced a substantial market downturn and a day of high liquidation. The sentiment is negative, and another significant downturn is probably on the horizon.”
Despite the current market conditions, analysts at Bernstein, led by Gautam Chhugani, expressed optimism about Bitcoin in the medium term. They stated,
“The next phase of the Bitcoin bull market is on the horizon, supported by several positive catalysts. We believe that the Crypto Task Force, led by David Sacks, is working towards establishing the National Bitcoin reserve at the President’s behest.”
They also suggested that the US Sovereign Wealth Fund (SWF) might consider including Bitcoin and other cryptocurrencies as part of its reserve assets.