Bitcoin and Crypto Markets Slide as US Dollar Climbs

In short

  • Large-cap cryptocurrencies like Bitcoin and Ethereum saw significant losses.
  • Ethereum liquidity and whale activity hit yearly lows.
  • The improving US Dollar helps the US economy but hinders Bitcoin’s appeal.

Crypto suffered a second day of losses after a weekend of near record breaking. Global market capitalization is down 3.4%, according to Nomics, hovering around $1.75 trillion.

Crypto mega caps were responsible for most of the losses. Bitcoin is down 4.5% at the time of writing, struggling to stay above $54,000.

Ethereum deteriorated slightly, falling more than 5%. This will likely have something to do with the amount of Eth held on centralized exchanges hitting a 19-month low, according to analytics firm Glassnode.

That’s not all, the number of addresses containing more than 100 items is also at its lowest for 19 months. There are also liquidity shortages in the WBTC and DAI markets, suggesting that users are preparing to either buy the low on the downside or sit on this round of volatility keeping an eye on earnings ahead. longer term.

But lower than the cap tables, Ripple, buoyed by calls for the project to be relisted, jumped more than 10% overnight. Uniswap also rose 5% and Market Watch star performer Theta Token adds another 12% to its token price as it enters the top 10 cryptocurrencies for the first time.

What is the reason for all this? It seems that the improving dollar strength has had a negative impact on the crypto. The accelerating US recovery is making the greenback a safe haven for investors, with the USD rising against the British pound, euro and Japanese yen. There is also a sudden influx of dollar buying after the Turkish lira fell 15% yesterday.

The greenback wins. IMAGE: MarketMilk

Historically, Bitcoin grew thanks to the weakening of the dollar – as it did last year. Trade between the EU, US and China also seems to be having an impact on investor sentiment.

This narrative is likely to create increasingly difficult conditions for Bitcoin to thrive as its status as an exotic growth asset is replaced with “use only if there is nothing else growing” .

On Wall Street, the tech megacaps all posted strong gains on the back of a pullback in the growth rates of Treasury yields. Apple rose 2.8%, Microsoft 2.4% and Tesla 2.2%.

The back and forth between growth and value stocks continued to spin yesterday. As tech stocks gained, airlines and travel companies, which had gained momentum in recent weeks on assurances that the world was returning to normal, plunged yesterday as COVID refuses to go away. to go.

With Europe now facing a new wave of COVID, the return to normalcy could be pushed back by a few months. Will it be good for crypto? It will depend on whether Bitcoin can continue to demonstrate its growth potential to investors craving price moves worthy of the crypto roller coaster.

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