According to CryptoSlate data, the total crypto market cap fell below $1 trillion, marking a three-week low. Similarly, market leader Bitcoin lost $22,000 as bears took control.
Recent days have seen the build-up of notable headwinds, including Silvergate going into voluntary liquidation and mounting speculation that the Fed will exercise a 50 basis point hike after the upcoming FOMC meeting scheduled for March 22.
The crypto market has lost its 2023 momentum
The total market cap sunk to $994.6 billion at the time of press – a level not seen since Feb. 13 as the Paxos/Binance USD situation blew up, triggering market panic.
New York regulators ordered Paxos to cease issuance of BUSD over allegations the stablecoin is not 1:1 backed with USD.
A bullish start to 2023 saw the total market cap rise from $795.2 billion to peak at $1.134 trillion on Feb. 21. The trough-to-peak move represented a 42% increase in valuation.
However, as the fallout from the spate of crypto bankruptcies catches up, not forgetting continuing macro uncertainty, crypto buyers have moved to exit their positions.
The Relative Strength Index (RSI,) a measure of market momentum, shows a current reading of 38, having peaked as high as 85 on Jan. 15.
The previous reading of 38 was on Dec. 31, meaning the crypto market has lost all of 2023’s market momentum.
Headwinds
On March 8, Silvergate announced it intended to wind down all operations and go into voluntary liquidation. Solvency rumors circulated after the crypto bank said it would miss its March 16 10-K filing deadline.
In response, several crypto platforms distanced themselves from the beleaguered bank. Most recently, KuCoin CEO Johnny Lyu sought to reassure users that his exchange “has no business relationship” with Silvergate and that “all users’ funds are safe with us.”
Lyu signed off, saying he hoped this was the last piece of “sad news” this cycle.
Speaking before the Senate banking Committee on Tuesday, Fed Chair Jerome Powell said the central bank is prepared to accelerate rate hikes if need be.
“If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
Powell’s renewed hawkishness had target rate probabilities flip to 78% in favor of a 50 basis point hike following March 22’s FOMC meeting, putting more pressure on risk-on markets.
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