After the cryptocurrency market crash on October 10, on-chain data shows a continued decline in digital asset prices, with bearish sentiment prevailing. Bitcoin (BTC), for example, has fallen 6% over the past seven days and is on course for one of its worst weekly performances this year.
Major cryptocurrencies fell below the crucial $100,000 mark for the fourth day in a row. If this is it downward trend If this trend continues and is confirmed in the coming days, selling pressure could intensify, causing further uncertainty in the market and potentially leading to a broader price decline.
Short-term weakness likely to continue
Looking at the broader picture, the market presents a mixed picture. Solana (SOL) is down 20% since the beginning of the year, and Chainlink (LINK) is down 33%.
Bitcoin, XRP, and Ethereum (ETH) have seen some gains this year, but they haven’t outperformed the stock market, which rose 14% over the same period.
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Interestingly, October also saw the highest weekly inflows into global cryptocurrencies. Exchange Traded Fund (ETF) (ETF), saw $5.9 billion in inflows in the first week alone, driven primarily by large allocations to Bitcoin and Ethereum. However, no new recoveries of these assets have been made.
The Federal Reserve’s recent announcement indicates that quantitative tightening (QT), which involves lowering interest rates, will end on December 1st. This change is expected to inject more liquidity into the crypto financial system.
However, Motley Fool analysts Note While increased liquidity does not guarantee a rise in cryptocurrency prices, it does mean that a QT outage will remove a permanent headwind.
They argue that while the environment felt bleak in October, the policy outlook suggests a more favorable environment going forward. For this reason, it is difficult to predict a significant bear market in cryptocurrencies at this point, but the short-term weakness is likely to continue for some time.
Cryptocurrency market struggles for stability
Although the recent decline has affected the entire market, the most significant losses have occurred among altcoins. Augustine Huang, partner at SignalPlus, said: noticed Aside from Bitcoin and Ethereum, the broader crypto market has been struggling for months, with new investment in alternative tokens and decentralized finance (DeFi) projects being minimal.
He stressed that without new catalysts, mainstream participation in the market is likely to remain subdued amid continuing security and regulatory concerns.
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Jeff May, chief operating officer of cryptocurrency exchange BTSE, said the recent decline in digital assets is partly due to concerns such as: artificial intelligence (AI) stock is overvalued.
He warned that a decline in artificial intelligence and tech stocks could push Bitcoin below the $100,000 threshold, and that altcoins would likely fall even further.
At the time of writing, Bitcoin has managed to recover to levels above $103,000. However, the leading cryptocurrency is still 18% below its all-time high of $126,000, reached just days before the infamous market crash on October 10th.
Featured image from DALL-E, chart from TradingView.com
