The global market capitalization of all the crypto tokens has tumbled below $1.2 trillion, falling about 16 per cent in the last 24 hours and 65 per cent from its peak of $3.2 trillion at the end of 2021.
The largest crypto token — Bitcoin — has dropped 13 per cent to test $26,500 levels, whereas its counter-peer Ethereum has lost over 28 per cent to breach the $1,750 mark. At the time of writing this report, both had witnessed a mild recovery.
BNB, XRP, Cardano, Solana, Polkadot and Avalanche dropped up to 35 per cent during the day. Meme tokens such as Dogecoin and Shiba Inu took plummeted up to 40 per cent.
Market experts said rising interest rates, inflation worries and geopolitical crisis are behind factors denting the market sentiment for crypto assets, which are now in a bear grip.
Nischal Shetty, Co-founder and CEO, WazirX said the significant dip in crypto assets is a global phenomenon and the market is going through a bearish phase.
Another factor the market participants are hinting at is the sync of crypto markets with global financial markets.
“Crypto markets are mirroring traditional financial markets as both are seeing a correction,” Shetty added. “It indicates that crypto markets are attaining maturity, and just like other markets, they also have a bear and bull cycle.”
Moving beyond the top 20 names, tokens such as eCash, Fantom, Gala, Flow, Harmony and Polygon have plunged up to 45 per cent.
On a weekly basis, Terra has lost 99 per cent of its value, followed by up to 70 per cent fall in Stepn, Apecoin, THORChain and The Graph.
Market trackers said that bitcoin has broken the key support of $30,000 and the crypto space has entered into a long bear cycle, which lasts longer than the bull run, and this time a number of crypto assets will be wiped out.
Hitesh Malviya, Founder, IBC Capital said the crash in Terra (LUNA) is the ‘Lehman Brothers’ moment for the whole crypto market.
“It could take about six months to get a positive long-term price growth in the crypto market,” said Malviya. “By that time more than 90 per cent of cryptocurrencies will eventually die due to liquidity and volume crisis.”
Market participants said smart investors with a higher risk appetite and longer time horizon should use these dips to buy quality crypto tokens, and keep away from the bush league tokens.
Interestingly, crypto volumes show signs of bottom fishing. In the last 24 hours, tokens worth $255 billion have exchanged hands, which is quite higher than the figure when the market was at its peak.
“In India, we have witnessed a sentiment of buying the dip as buyers have marginally dominated the market,” Shetty from WazirX said. “The buying behaviour illustrates that there is still investor confidence in the market even at current levels.”