At the beginning of the trading session on Monday, the value of the first cryptocurrency soared by 6% to $30,700. Bitcoin continues to follow a positive trend and was trading at around $30,680.
The cost of bitcoin showed growth for the first time after eight weeks of permanent decline. Over the past two months, the price of BTC has fallen 1.6 times to $29,000 from $45,800. At the same time, since the beginning of May, bitcoin has already lost more than 18%, and since the beginning of spring - about 30% of the cost. At the end of February, bitcoin was worth $43,200.
Since last November, when bitcoin hit a new all-time high, skyrocketing above $69,000, the cryptocurrency has already lost about 60% in price.
Altcoin market
As for the state of the cryptocurrency market as a whole, on Monday the leading altcoins willingly adopted the leader's movement vector and showed steady growth. Thus, the maximum results over the past day were demonstrated by the Cardano coin (+11.81%).At the same time, following the results of the past week, the fall of the Ethereum altcoin turned out to be even louder than the loss of bitcoin. And if over the past seven days the king of the digital asset market sank by 3%, then Ethereum lost about 11% of its value.
On Monday, the second largest cryptocurrency by capitalization took over the dynamics of the BTC and also started trading with growth. The altcoin traded at $1,879.
As for the leading cryptocurrencies from the top 10, over the past week they have lost from 4% (Dogecoin and BNB) to 14% (Solana) of their price.
Despite the fact that most of the top 10 virtual assets by capitalization ended the week in the red zone, over the past seven days, the total capitalization of the crypto market even managed to grow slightly, adding 0.45% and reaching $1.21 trillion.
Causes of depression in the crypto market
Since the beginning of this year, the virtual asset market has fallen sharply against the backdrop of investors actively abandoning more risky investments. The capital of global market participants actively flowed from risky assets to risk-free ones amid their concern about the tightening of the monetary policy of the US Federal Reserve as part of the fight against inflation.
At the same time, the cost of bitcoin has lost about 37% since the beginning of the year, and Ethereum has fallen by 48%. According to CoinGecko, the total market value of all digital assets decreased from $3 trillion in November 2021 to $1.3 trillion in May 2022.Experts call the armed Russian-Ukrainian conflict and the permanently growing geopolitical tension in Eastern Europe the main reason for such a confident negative dynamics of the digital asset market in recent years.
Another important downward factor for the value of virtual assets has been the ever-increasing dominance of the United States in the cryptocurrency market. This state of affairs was a continuation of the political war that has unfolded in the currency arena since 2014. This dominance of America became especially clear in the past year, when China introduced bans on the use of virtual coins.
An additional incentive for investor disappointment in the reliability of digital assets can also be called the current monetary policy of the Fed. Recall that following the results of the May meeting, the Fed raised its key rate by 50 basis points, now its range is 0.75-1% per annum. Earlier in March, the US central bank raised the rate by 25 basis points. The last time the central bank raised the rate following the results of two meetings in a row back in 2006. At the same time, there has not been an increase in the indicator by 50 basis points at the same time since 2000.
By the way, earlier, many representatives of the Fed announced a possible start of monetary policy easing next year. Bringing these visions to life will be a tangible boost for both traditional assets (stocks, bonds) and digital ones. However, it is too early to fall into euphoria, we should wait for fresh reports on the current level of inflation and GDP dynamics.
Analyst forecasts
Despite the protracted depression of the digital asset market, many experts believe in its bright future. So, the day before, experts from one of the largest banks in the world, JPMorgan, spoke about the current and future state of the crypto market. Analysts said that the fair price of BTC is at $38,000.
Considering that bitcoin was trading in the region of $30,000, the fair price of the coin declared by analysts is almost 30% higher than the actual one.
In addition, economists from JPMorgan are confident in the further growth of the first cryptocurrency and the digital asset market as a whole.
