Cryptos Tumble Again As War Fears Add To Fed Fears

By RTTNews Staff Writer | Published: 1/24/2022 10:10 AM ET

Risk aversion swept through the cryptocurrency markets as anxiety over the Fed’s policy review on Wednesday was exacerbated by the heightened geopolitical tensions in Europe. The Fed, in a forceful combat against inflation is seen raising interest rates, reducing the pandemic era stimulus as well as draining the excess bonds in its Balance Sheet, and thereby draining liquidity during the course of the year and beyond.

Tensions between Ukraine and Russia, both former Soviet states have escalated with troop build-up near the borders, threatening to escalate into a full-blown conflict.

Crypto market witnessed a loss of technical momentum as market capitalization dropped to $1.5 trillion, from $1.8 trillion on Friday and $2 trillion on Thursday.

Bitcoin increased its dominance to 41.8 percent, from 40.4 early on Friday as Ethereum suffered a decline of 1.1 percent, to 17.4 percent, from 18.5 on Friday. Residual altcoins edged down to 40.8 percent market share versus 41.1 earlier.

In the global ranking of all assets as per companiesmarketcap.com, Bitcoin has slipped two notches to 12th position while Ethereum has fallen 4 notches to 36th rank between Friday and now.

Market leader Bitcoin has shed more than 5 percent overnight to trade at $33,796.50, more than 50 percent lower than the $69k peak scaled last November. Only 46 percent of the Bitcoin holders are in-the-money at current prices. BTC had dropped to a low of $33184.06 in the past 24-hours.

Lead contender Ethereum has dropped by a whopping 10 percent overnight and is currently trading at $2,222.35, almost 55 percent lower than the peak of $4.9k scaled in November. ETH dropped to a 24-hour low of $2186.35.

No cryptocurrency among the top-100 other than stablecoins are trading in positive territory on an overnight basis.

Among the top-15 cryptocurrencies, BNB, Cardano, Polkadot, Avalanche and SHIBA INU have lost between 10 and 15 percent in the past 24 hours. Solana has shed around 17 percent amidst repeated instance of network outage. XRP, Terra and Dogecoin have lost between 5 and 10 percent.

The top-15 cryptocoins in the order of market capitalization now are Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), Cardano (ADA), XRP (XRP), Solana (SOL), Terra (LUNA), Dogecoin (DOGE), Polkadot (DOT), Avalanche (AVAX), TerraUSD (UST), Polygon (MATIC), Cosmos (ATOM), Litecoin (LTC) and NEAR Protocol (NEAR).

In the tokens category, Tether (USDT), USD Coin (USDC), Binance USD (BUSD), SHIBA INU (SHIB), Dai (DAI), Wrapped Bitcoin (WBTC), Crypto.com coin (CRO), Chainlink (LINK), Uniswap (UNI), FTX Token (FTT), Bitcoin BEP2 (BTCB),Decentraland (MANA), UNUS SED LEO (LEO), Axie Infinity (AXS) and The SandBox (SAND) rank in the order of market capitalization.

Interestingly, four of the top-5 tokens are stablecoins.

Stablecoins increased in dominance to 11.24 percent from 9.17 percent on Friday. Among the other categories, Smart Contracts dropped 170 basis points, to 27.13 percent from 28.83 percent on Friday. Web 3 category dropped 40 basis points to 2.96 percent share of the market, closely followed by NFTs and Collectibles which declined 30 basis points to 2.05 percent dominance.

Metaverse dropped 23 basis points to 1.32 percent dominance while Scaling and Decentralized Exchanges dropped 21 basis points each.

DeFi and Gaming categories lost 17 basis points each in market dominance. DeFi dominance is now at 7.74 percent while Gaming category has a 1.22 percent market share among cryptocurrencies. Memes shed dominance by 9 basis points only and command 1.86 percent of the cryptocurrency market capitalization.

Meanwhile a top official of the European securities regulator European Securities and Markets Authority has reportedly said that the EU should consider banning energy-intensive forms of crypto mining on account of the risks posed to the environment and climate change.

The turbulence in the crypto markets as well as the larger financial landscape have demonstrated a deep rooted risk aversion in the run-up to the monetary policy tightening by the Fed. In the previous instance of monetary policy tightening, cryptocurrencies as a risk class were not as popular. The nervousness this time is understandable and crypto watchers are extremely vigilant.

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Article written by an RTT News Staff Writer, and posted on the RTT News.com website.

Article reposted on Markethive by Jeffrey Sloe