Crypto Market Faces Downward Pressure Amid Inflation Concerns and Global Uncertainties
Summary:
The crypto market is facing a downturn as investors handle higher-than-expected inflation and global uncertainties. Market volatility has led to increased liquidations, driving the total value locked in the market to lows unseen since March 2021. The Total Value Locked (TVL) indicator for Ethereum and other proof-of-stakes blockchains, as well as decentralized applications, has hit a multi-year low of $36.8 billion. The descent is accentuated by low trading volumes and futures liquidations, with $50.3 million worth of long positions liquidated in the last 24 hours. However, some analysts believe the broader economy offers long-term buying opportunities for Bitcoin and other risk assets, despite short-term challenges.
The overall sentiment in the cryptocurrency market skews negatively as investors and corporations take into account today's greater-than-forecasted inflation trends and ever-increasing geopolitical uncertainties in regions like the Middle East and Ukraine. The existing market instability has prompted a surge of liquidations, plunging the total value locked (TVL) in the cryptocurrency market to a point not seen since March 2021. A snapshot of the cryptocurrency market's performance during the past month, as reflected by Coin360, reveals these trends.
The inflation rate unveiled on the September Producer Price Index (PPI) was reported higher than anticipated, disclosing a 0.5% surge. This announcement corresponded with a dip in Bitcoin (BTC) value, bringing its price to its lowest in two weeks. This information relating to inflation has added to the apprehensive sentiment permeating the financial atmosphere, as major banks forecast a potential economic downturn in the United States in 2023. Analysis by U.S. Bank also indicates likely future interest rate hikes, which is not bolstering investor confidence in an already turbulent economic climate.
The Total Value Locked (TVL) - an important metric for validating the robustness and investor sentiment of proof-of-stake (PoS) blockchains like Ethereum (ETH) and when assessing decentralized applications (DApps) - witnessed a significant dip reaching a new multi-year low. At present, the total value locked across the cryptocurrency market rests at $36.8 billion, its lowest since February 7, 2021. The highest contributor to the TVL currently is Lido (LDO), accounting for almost 38% of the total value.
In addition to the diminished TVL, trading volumes are also experiencing a 15% drop. This, coupled with liquidations of long derivative positions due to insufficient buying pressure from trading volumes or TVL, is exerting a downward pull on the prices in the crypto market. In the last 24 hours itself, about $50.3 million worth of long positions were liquidated in the crypto market. The largest liquidation witnessed was a Bitcoin long on the OKX exchange, valued at $1.5 million.
Some market observers maintain that the broader economy is sufficiently robust to present a lucrative long-term buying opportunity for Bitcoin and other risk assets, based on the current macroeconomic factors. However, it is conceded that in the short-term, the cryptocurrency market will continue to grapple with a complex network of challenges. The flux in various economic variables is anticipated to determine the crypto market's course in the upcoming future. As with all investments involving risk, potential investors are recommended to conduct comprehensive due diligence before making any financial decisions.
Published At
10/11/2023 6:26:14 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.