Just when the cryptocurrency market began showing a glimmer of hope and a path to recovery, the market once again experienced somewhat of an unexpected tumble. Bitcoin in particular made a stride in the last week climbing to as high as $22,700 but has since then fallen by nearly 13%, back down to $19,000 territory. This scare comes after August inflation of 8.3% turned out to be far higher than was previously anticipated. The stock markets too were part of this wild tumble yesterday.
Highlights of the week
- Bitcoin underwent a fall exceeding $2,500 in a single day, following numbers released on August inflation standing at 8.3%. Ethereum too felt the heat of this trigger, and plunged to below $1,600, after a struggling recovery. Many have pointed out that this fall could continue throughout the week if bearish sentiment continues to dominate the markets.
- In the wake of a number of developing regions finally opening up to the inevitability of cryptocurrency, the Egyptian central bank has been clamping down hard on the use of these digital assets. The authority has renewed its warning to citizens regarding the issuance, trade, or promotion of cryptocurrencies, as well as operating trading platforms. The central bank further emphasized that offenders would face imprisonment under the law.
- Since the Indian government introduced an elaborate tax regime for digital assets, Indian users have been flocking away from Indian exchanges and towards Binance. The number of Binance app downloads in the month of August alone jumped to almost 430,000, while Indian crypto exchanges are down by as much as 90%.
- With all the hype surrounding the upcoming Ethereum merge, Singapore was the most interested in the milestone, coming up with a search score of 377. Canada and Switzerland came in at number 2 with a score of 286. The same study also stated that searches relating to proof-of-work are 169% higher than that of proof-of-stake.
- After facing paralytic sanctions, the Russian Federation has emphasized its seriousness in working around these restrictions through the use of cryptocurrencies. Moscow-based lawmakers have said that the upcoming months will see a wave of legal relaxation on digital currencies, with crypto-trade settlements taking place as early as 2023.
Cryptocurrency fear & greed index
Quantifying the emotional or sentimental standing of the wider market at any given time is by no means an easy feat. This is where the crypto fear and greed index comes in, by factoring in a number of variables in order to deliver a rating between 1 and 100. The index indicates whether the market as a whole is tilted towards fear or greed, as well as the severity of this tilting.
At present, this figure stands in the fear zone at 28, which suggests a slight improvement considering that the index was at extreme fear last week with the figure at 20. However, prior to the sudden market tumble, there was significantly less fear amongst traders and investors, given that the index was at 34 just two days earlier.
Although the index has jumped up from the extreme fear to the fear zone, its fall in the last two days, coinciding with a wider market crash raises concerns throughout the market. The market will closely be following BTC and ETH prices in the coming days, in order to determine if the present plunge is a temporary setback, or if it indeed signals a wider intrinsic fall.