21 Jan 2022 Arjun Agarwal
$230 Billion Left The Crypto Market In A Massive Selloff
Crypto markets fell victim to the first massive selloff in 2022, resulting in a loss of around $230 billion in just 12 hours. The total crypto market cap plunged to sub-$2 trillion territory. The last time the total crypto market cap was below $2 trillion was in September 2021.
Furthermore, the crypto “fear and greed” index has plunged to an “extreme fear” level of 19, as market sentiment turns increasingly bearish.
Bitcoin, the crypto leader, recorded a loss of 10.68% over the past 24 hours. The leading cryptocurrency fell from $43,413.02 to a daily low of $37,945.56 before bouncing to a current price level of $38,372.88 per BTC. Crypto experts are fearing that the break below $40,000 could lead the way to further price losses.
Source: CryptoBrowser
Ethereum followed suit and lost 13.69% over the past 24 hours according to data from Cryptobrowser.io. The second-largest crypto to date fell to its lowest levels since Sept. 29 when ETH has hit $2,772.96.
Among the biggest reasons for the selloff is US 10-year Treasury yields soaring earlier this week, and rising rates forced investors to abandon their positions in riskier assets. Furthermore, the crypto industry saw several regulatory setbacks recently, as skepticism about the rapid growth of digital assets around the world increases.
Cryptocurrency exchanges will be the main focus of the US Securities and Exchange Commission (SEC) regarding digital assets in 2022. Also, Russia’s central bank proposed a ban on Bitcoin mining and cryptocurrency trading all across Russia, which further imposed pressure on the crypto market.
To top it all off, Huobi published a report, claiming Bitcoin would enter a bear market in 2022. In the “Global Blockchain Industry Overview and Trends 2020-2021 Annual Report”, Huobi stressed that Bitcoin is likely to suffer a bear market, as global markets will react to the U.S. Federal Reserve dialing back on asset purchases.
“Fed tapering is likely to cause a reduction in global liquidity — or money pumped into the global economy — this year. Like many other high-risk assets, Bitcoin is often sensitive to changes in liquidity. Therefore, the cryptocurrency will face a ” bear market,” where the security faces a prolonged price decline.” the Huobi Research Institute added, stressing that Fed tapering and increasing interest rates could cause global liquidity to shrink and ultimately affect Bitcoin’s price.
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