The cryptocurrency market experienced a downward trend at the beginning of the week, following a challenging week for bitcoin, which marked its most significant decline since May. Bitcoin exhibited a marginal increase of only 0.02%, reaching a value of $26,136.36, as reported by Coin Metrics. In the preceding week, it incurred an 11% loss due to a steep drop that commenced on Wednesday afternoon. Meanwhile, Ether registered a decrease of 0.18%, settling at $1,674.
On Monday, altcoins demonstrated more substantial downward shifts. Ripple’s XRP, in particular, experienced an almost 5% decline. Other coins linked to competitors of Ethereum, such as Solana, Polygon, and Cardano, also underwent losses of approximately 3% each. Within the realm of decentralized finance (DeFi), tokens also saw a decrease. The Cosmos token registered a reduction of over 3%, while Uniswap’s coin exhibited a 2% decline.
“The predominant factor behind the market downturn is probably the external pressures originating from China,” remarked Chris Martin, who serves as the Head of Research at Amberdata. He further elucidated, “Asia holds significant influence in the realm of cryptocurrencies, particularly with Hong Kong and Singapore facilitating involvement. However, given the broader economic decline, it appears unlikely that the anticipated bullish market trajectory will unfold as initially hoped or expected.”
“In terms of bitcoin and ether, they typically serve more as stores of value in contrast to other cryptocurrencies. However, they have also endured notable declines — with drops of 11.5% and 9.8%, respectively, over the past 7 days — which indicates they are not entirely impervious,” he continued. “Generally speaking, altcoins tend to exhibit more pronounced fluctuations, and my belief is that as institutions increasingly become participants through mechanisms like spot ETFs, direct investments, and derivatives, the volatility of these tokens should gradually diminish.”
Throughout a significant portion of the third quarter, Bitcoin’s performance remained relatively stagnant, which is a recurring trend during this historically weaker period for the cryptocurrency. Presently, its value has receded by 14% for the quarter and approximately 10% for August. Many had anticipated that the approval of a spot Bitcoin exchange-traded fund or the introduction of clear crypto-related legislation by Congress could trigger an increase in upward volatility. However, a shift in focus by the Federal Reserve towards real rates, coupled with China’s Evergrande filing for U.S. bankruptcy protection, exerted downward pressure on the crypto landscape instead. Despite the recent dip in market performance, preceding the significant decline observed last week, Bitcoin still maintains a year-to-date growth of around 57% in 2023.