The crypto market is having a good week, and on the penultimate business day of the week, the total capitalization of digital coins is approaching $2 trillion. The last time the crypto market came to these values was in April. That was after Bitcoin hit a historic high of $65K and when the first cryptocurrency had already turned to decline.
Such dynamics in the spring resonated with the situation in early 2018 when bitcoin had already passed its peak at $20K. Still, the momentum in altcoins was so strong that it confidently pushed up the overall capitalization.
Over the past seven days, Bitcoin has added 16% and is trading around $46K. Bitcoin’s dominance index continues to decline gradually and is currently below 45%. As a result, the capitalization of the crypto market without Bitcoin has surpassed $1 trillion, a psychologically important level for many enthusiasts.
One of the main events in the crypto market was the robbery of the Poly Network computer network for more than $600 million. This is the largest hacking attack in the history of the crypto market.
An important distinguishing feature of the current hack is the return of funds by the hacker. It is unknown whether the hacker will return all the money, but he has already returned about $400 mln so far. It is hard to say what he is guided by: pressure from the big crypto players, impossibility to withdraw and legalize such capital or hacker ethics. The hacker said that he has already “written his name in history.”
In this case, all may end well. Still, the precedent itself reminds all market participants of the vulnerability to hacker attacks, which plays into the hands of regulators to more vigorously “protect investors’ interests” through new restrictions.
After the Ethereum network’s hardfork, the best advertisement for workability was a massive 50K ETH ($157 million) transaction with a fee of only $6. In addition, at one point, the asset became deflationary when more coins were burned than mined. According to Coinbase Global (NASDAQ:COIN), ETH trading volume for the second quarter exceeded that of BTC for the first time. Likely, this is also since Bitcoin is actively withdrawn from cryptocurrency exchanges.
According to Glassnode, the volume of BTC transactions over $1 million has jumped several times since September 2020, reaching 70%. This data speaks to the prevalence of large institutional investors in the market, which probably prevented a broad correction and the launch of the new crypto winter after BTC hit $65K.
Nevertheless, due to the high number of institutional investors, the crypto market can now correlate strongly with traditional exchanges vulnerable to regular corrections. Renowned investor Rich Bernstein warns that many long-term assets are now in great danger, from large tech companies and Bitcoin to bonds. Likely, a broad sell-off in the traditional market will trigger a fall in Bitcoin as well.
The FxPro Analyst Team