Market Wrap: What happened with the top five cryptocurrencies this week? (31-Dec-2021 to 7-Jan-2022)
The first week of 2022 has seen significant negative price action across the cryptocurrency markets, at least for the top five by market cap (stablecoins excluded).
The Crypto Fear and Greed Index, which analyses emotions and sentiments in the market, is currently sitting at 15 out of 100, well within the “Extreme Fear” territory.
There are a few key reasons why the market could be seeing this slump.
Bitcoin fell significantly below its US$46,000 support level, causing over US$812 million in crypto futures liquidations across the market, and US$317 million worth of losses on Bitcoin-tracked futures alone, according to data from Coinglass.
87% of those positions were betting on upward price movements, forcing exchanges to close trader’s leveraged positions as a safety mechanism due to losses.
Additionally, a surge of protests erupted in Kazakhstan this week. Kazakhstan is the second-largest Bitcoin mining hub and the country’s government enforced a nationwide Internet shutdown in an attempt to quell unrest, forcing local miners to switch off their equipment.
The tumultuous market could also be explained by the Wednesday release of minutes from the U.S. Federal Reserve’s December meeting, detailing that the bank could hike interest rates as soon as March.
Bitcoin was trading sideways around US$47,000, before the big fall by 8.8 per cent on Thursday, hitting the week’s low of US$42,703. At the time of writing, $BTC was down 6.4 per cent over seven days.
Ethereum had been slowly climbing from US$3,700 to US$3,800, even reaching a high of US$3,895 on Wednesday. On Thursday, ETH slid by over 12 per cent to a weekly low of US$3,332. $ETH is down 5.6 per cent for the week.
Binance Coin was trading at around US$520 early in the week, before peaking to a high of US$$532 on Monday. As with the others, it fell sharply on Thursday by almost 10 per cent, to a low of US$462, culminating in a 7.2 per cent fall over the last seven days.
Solana traded sideways early in the week, seeing support around US$170, before rising to a seven-day high of US$179. In a familiar theme, $SOL slid over 12 per cent Thursday, bottoming at US$147, down 11.2 per cent for the week, the most significant loss for the 2nd week in a row on this list of assets.
Solana reportedly went offline for four hours on Wednesday, the third such incident in six months, it is still unclear what clogged the network and caused transactions to fail. Speculation whether it was caused by another distributed denial-of-service (DDoS) attack or if it was just network issues is still prevalent,
Cardano had the least significant losses for the week on this list. Down 5.4 per cent, $ADA dropped 9.4 per cent Thursday, hitting a seven-day low of US$1.20, just under US$1.30 from earlier in the week. At the time of writing, $ADA was climbing back up, and is currently trading at US$1.27.