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Why is the cryptocurrency market declining in 2024? – Forbes INDIA Consultant
The cryptocurrency market has recently suffered a downturn, with the total market capitalization falling by approximately 7.68% to $2.27 trillion the previous day. Bitcoin, the largest cryptocurrency, is currently trading at $67,279, down 7.69% over the past seven days but reflecting a rise of 4.98% over the past 24 hours. Ethereum, the second largest cryptocurrency, is trading at $3,527, down 10.25% over the past seven days.
Cryptocurrency market capitalization has fallen from $2.73 trillion to $2.53 trillion over the past seven days, while 24-hour trading volume stands at $148.02 billion. The month was marked by significant cryptocurrency price fluctuations, most notably with Bitcoin reaching a new all-time high of $73,750 before subsequently collapsing to the $62,000 level in a matter of weeks. It remains uncertain whether the second half of the month will bring slower growth or whether cryptocurrencies will reach new all-time highs again.
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How is the cryptocurrency market doing?
The cryptocurrency market is showing significant volatility, with prices fluctuating unpredictably. Currently, there is a decline after Bitcoin surpassed its all-time high several times this month. According to the latest update, the Fear and Greed index is equal to 82.34, indicating a state of extreme greed.
CoinMarketCap
The decline in cryptocurrency market capitalization coincides with the largest single-day outflow ever seen from Spot Bitcoin ETFs. Bitmex Research Reports that the Grayscale Bitcoin ETF saw its largest outflows of $642.5 million on March 18, 2024. Meanwhile, the Fidelity Bitcoin ETF saw its lowest inflows at $5.9 million . As a result, Spot Bitcoin ETFs experienced a net outflow of $154.3 million. The decrease in capital flow into Bitcoin ETFs occurred in anticipation of the Federal Open Market Committee meeting scheduled for yesterday.
On Wednesday, the Federal Reserve held interest rates stable as expected, but signaled its plan to implement several rate cuts before the end of the year. After the two-day political meeting, the Federal Open Market Committee (FOMC) announced its decision to keep its benchmark overnight borrowing rate in the range of 5.25% to 5.5%, which has remained unchanged since July 2023. In addition to this announcement, Fed officials predicted rate cuts rates by three-quarters of a point by the end of the year, representing the first reductions since the start of the Covid pandemic in March 2020.
The decline is part of a broader correction that began on March 14, coinciding with a local peak of around $2.72 trillion. First, signs of bearish divergence appeared before the correction, evident in the growing market capitalization along with the decline in the daily Relative Strength Index (RSI), suggesting a weakening of the underlying strength in price growth. Second, the market’s daily RSI reached excessively high levels prior to the correction, signaling overvaluation and causing traders to reduce demand due to the perception of inflated prices.
The significant drop in prices of major cryptocurrencies has triggered numerous liquidations in the derivatives market, surprising bullish traders and causing a wave of liquidations of long positions. According to Coinglass data, the cryptocurrency market has seen more than $161.52 million in positions liquidated, with long positions accounting for around $70 million of the total in the past 24 hours.
Liquidation of long derivatives positions can put downward pressure on asset prices, especially in the absence of sufficient buying momentum indicated by trading volumes.
As of March 21, 2024, BTC is trading at $67,261, approximately 8.95% from its all-time high, while ETH is trading at $3,544, or approximately 27.61% from its all-time high.
However, market sentiments have transformed from extreme greed, greed, extreme greed. This is the nature of the cryptocurrency market which is highly volatile and unpredictable. The current volume in the digital cryptocurrency market amounts to $147.82 billion.
The cryptocurrency market has undoubtedly responded positively to global financial uncertainty thus far and is still holding strong amid a tightening credit situation with shaky bond market volatility. Cryptocurrencies cannot navigate alone, for a balanced climate all other financial assets must follow the same sentiments.
Is investing in cryptocurrencies safe?
The cryptocurrency market has seen the good and the bad side of the market, whether it is the post-Russia-Ukraine effects, the collapse of Earth-Moon, the collapse of FTX or the tightening of fiscal regulation, it has witnessed the most storms violent in recent years.
The year 2023 gave a new beginning to the world of cryptocurrencies, showing positive signs of recovery. Cryptocurrency investors believe that in situations like this, investing in stable digital currencies like Bitcoin and Ethereum in SIP format is a safe choice. Cryptocurrency experts believe that in the overall portfolio, investors should look to invest only 5% exposure to cryptocurrencies. The most important part is to invest only a tiny amount and not your entire life savings as the market is highly volatile and there are chances of you losing everything.
Steps on how to invest in the Indian cryptocurrency market
Step 1: Select a Cryptocurrency: Choose a cryptocurrency you want to invest in. Like any other asset class, cryptocurrency has its fundamentals and different blockchain networks that support them, intrinsic value, and mining techniques. Be sure to research and analyze before investing as the cryptocurrency market is highly volatile.
Step 2: Select a Cryptocurrency Exchange: After you have decided on a cryptocurrency, it is time for you to find a cryptocurrency exchange platform that is perfect for you. It is a necessity to have a functional account in a cryptocurrency exchange that will help you buy and sell cryptocurrencies. Check out our article on best cryptocurrency exchanges in India.
Step 3: KYC: Once you have selected a cryptocurrency exchange you need to register by providing personal details like name and address and complete all the KYC formalities. After setting up your account you are ready to invest in cryptocurrency.
Step 4: Choose your payment method: To purchase a cryptocurrency you need to select a payment option that you find convenient. You can choose peer-to-peer, bank transfer, online payment methods or a crypto wallet.
Step 5: Buy Cryptocurrency: After adding funds to your account you can easily purchase the selected cryptocurrency. All you have to do is press on the “buy” tab and you can easily purchase the cryptocurrency of your choice.
Step 6: Storage: After purchasing cryptocurrencies, don’t forget to store your currencies safely because they are unregulated and you need to keep them safe as there is always a risk of hacking or theft. you can control crypto storage options from here.
Step 7: Selling cryptocurrency: This is as important as buying as it helps you earn money by investing. You can sell cryptocurrency the same way you bought it, just click on the “sell” tab in your wallet. You can fully or partially sell your cryptocurrency investment based on your choice, but don’t forget to book your profits timely.
Featured partners
Inheritance
Over 1 million investors trust Mudrex for their cryptocurrency investments
Safety
Mudrex is the Indian government. Recognized platform with 100% insured deposits stored in encrypted wallets
Commissions
Enjoy zero cryptocurrency deposit fees and the best rates in the industry.
Award-winning broker
Listed in Deloitte Fast 50 Index, Best Global FX Broker of 2022 – ForexExpo Dubai October 2022 & more
Best-in-Class for investment offerings
Trade over 26,000 assets with no minimum deposit
Customer care
Dedicated 24/7 support and easy registration
Welcome bonus on first deposit:
Get $30 in your verified trading account on your first deposit.
Variety:
Trade CFDs on cryptocurrencies, forex, stocks, metals, commodities and more!
Intuitive and economical:
Designed for traders of all levels, from beginners to professionals.
We invite you to invest carefully, your capital is at risk
Bottom line
It is a wise choice to cautiously observe the cryptocurrency market with the uncertain environment and slow recovery of macroeconomic situations in the world. Don’t make rash decisions because it is a good time to closely observe the market and analyze it.
We may never know, but the observation will ultimately help investors make smart decisions and they may have a preferred digital asset at a fair value, once the chaos situation has fully resolved.