Over the past month, the most important digital currencies on the market have all seen their prices drop by a lot. This has made it hard for cryptocurrency investors all over the world.
From just over $1.8 trillion at the beginning of June, the overall market value of this emerging industry has decreased by almost 40% to approximately $1.3 trillion.
Even though the market is going down and there are signs of contraction, the link between Bitcoin and Ether and the altcoin market as a whole has stayed strong. The connection between BTC and ETH has stayed very stable over the past 30 days, hovering around 0.80.
According to Leo Cheng, co-founder of the decentralized lending protocol C.R.E.A.M. Finance, Bitcoin (BTC) has been viewed as the most reliable and secure way to keep value across the global cryptocurrency landscape. However, in comparison to the world’s largest cryptocurrency, Ether and a slew of other altcoins have skyrocketed in value since April.
Cheng says that adoption measures for the cryptocurrency business, such as the number of users and the amount of network traffic, have reached all-time highs. This is despite the fact that cryptocurrency prices are very volatile. Crypto project developers are continuously coming up with new ideas and constructing new things. Recessions, he says, “quiet the naysayers and give architects and engineers breathing room to try out fresh methods in their trade.” Architects and engineers have greater leeway to experiment during a downturn than they do during a boom.
Antoni Trenchev, CEO of digital asset platform Nexo, says that China’s latest love-hate relationship with cryptocurrencies has hurt Bitcoin’s price and will likely have a negative effect on the market as a whole. China has had a love-hate relationship with cryptocurrencies in the past.
If inflation rates keep going up after hitting an all-time high in May, this means that cryptocurrencies will do better than all other asset classes for the rest of the year.
Bitcoin Continues to Dominate the Crypto Market
When the price of Bitcoin rises dramatically, the market responds positively. This is because when traders and investors have a positive outlook on BTC, it frequently spreads to other altcoins.
On the other hand, the strange way the crypto market works has been shown over and over again. Fear, uncertainty, doubt (FUD), and short-term volatility (volatility) play outsized roles in determining the financial momentum of the sector.
The moderator of the Anonymous Harvest Finance system for autonomous yield farming, Winston, disagrees, claiming that major cryptocurrencies have been steadily losing value since Bitcoin’s dominance peaked on May 18.
So, Blake Ho, the COO of the DeFi platform Furucombo, tells investors to take a break from Bitcoin, Ether, and other cryptocurrencies and diversify their portfolios. “Allocating some funds to stablecoins for loan rates or promising projects for long-term investment will help reduce one’s overall risks,” he believes.