- The total market capitalization of the global crypto market seats at $2.1 trillion amid a fairly bullish market.
- Market sentiments are suggestive that it can maintain the $2 trillion mark for a while as institutional investors wade into the market.
- The crypto markets had kissed $2 trillion in 2021 before tumbling down to abysmal lows in May.
Excitement rents the air for cryptocurrency enthusiasts after the global cryptocurrency market capitalization exceeded $2 trillion for the first time in over three months. After a summer marked by lackluster price action, things have changed as Bitcoin temporarily reclaimed $50K from a previous low of $29K and several other cryptos recording double-digit gains.
Can The Market Stay Above $2 Trillion?
Cryptocurrencies and volatility are like peas in a pod and with prices swinging wildly in both ways, investors may remain uncertain about the future. Yet a certain demographic hold bullish sentiments and has hinged their argument on certain factors.
First of all, the avalanche of institutional investors is seen as a sign of a sustained drive. In early August, it was revealed that the number of BTC on exchanges fell sharply and was quickly interpreted as institutional investors buying BTC and pulling them off exchanges into cold storage. It seems that the inference was correct as Bitcoin began its ascent amid rumors of adoption from Amazon.
Furthermore, MicroStrategy recently beefed up its holdings after it added 3,907 BTC which brings the total number of BTC held by the firm to over 100,000.
Altcoins are pulling their weight with Ethereum’s London Hard Fork bringing a slew of positives to the network. The latest upgrade seems to have come with good tidings as the asset trades at $3,568 and with Ethereum 2.0 underway, investors are confident that the prices will hold up well.
Cardano’s foray into smart contracts with the Alonzo upgrade and the proposed launch of the ERC-20 converter has seen the asset exceed its previous all-time high and is set to break $3.00. Enthusiasts are hopeful that the resolution of XRP’s legal travails with the SEC will trigger a price rally for the markets that will sustain the current levels.
Things Do Not Always Go As Planned
Cryptocurrencies are marked by extreme volatility that can erase the previously realized gains. In May, the market came tumbling down following Elon Musk’s decision to preclude Tesla from accepting Bitcoin as payment citing environmental concerns of Bitcoin mining. This was exacerbated by the Chinese anti-cryptocurrency crackdown that affected mining activities and other ancillary crypto activities.
In recent times, reports of security breaches like the Polygon hack and Japan’s Liquid Global may cause investors’ sentiments to change. Furthermore, intense regulatory scrutiny of the sector by government agencies has the potential to trigger a bear market once again. Already, Binance, the largest cryptocurrency exchange in the world is being hounded by regulators around the world.
Why It Matters
A large cryptocurrency global market capitalization indicates wider adoption rates which are beneficial for the entire space. The value of coins will soar as investors reap their rewards. A $2 trillion crypto market will incentivize new institutional investors to wade into cryptocurrencies while regulators intensify their efforts.
Source: Read Full Article