Total capitalization of the cryptocurrency market has fallen below $1 trillion. The last time capitalization was in this area was in January 2021. What happened in the aftermath crypto enthusiasts remember well, but we will refresh your memory by looking at the chart from TradingView. So what will happen this time?
Is there a capitulation yet?
No matter how much crypto fans want to distance themselves from all the usual and customary patterns of traditional finance, it is worth recognizing that the crypto market lends itself to the standard process of the market cycle.
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Describing the market cycle briefly, there are four key stages: accumulation, momentum, distribution and capitulation. The important question on people’s minds who follow the market very closely is whether capitulation has already begun, or do we still have room to fall before we start accumulating?
The subject is complicated. For example, crypto analytics provider Glassnode wrote in its early June review that the market is likely in the final phase of capitulation. Arguments and observations included the facts that the market is trading near the price lows of the 2021-22 cycle, most investors are incurring unrealized losses and miners’ earnings have plummeted. The facts are indeed in place, but since the publication of the review, the total capitalization of the crypto market has fallen another 22%, which is quite a lot.
At $943 billion, we are now $140 billion away from the bottom of 2021, which equates to an additional 17% drop. Even if we do not reach these values, the question of what happens next, as asked at the beginning, is answered quite clearly. Further, in any case there will be a long, deposit-crushing, exhausting consolidation, but it will be followed by a new dawn and new momentum on the market.
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