Market Wrap: What happened with the top five cryptocurrencies this week? (7-Jan-2022 to 14-Jan-2022)
Another bearish week has passed for the top cryptos, with most sliding by a few per cent, or only barely recouping their losses.
For the past few weeks, bearish sentiment has arisen around the news of the U.S. Federal Reserve hiking interest rates at least four times this year in hopes of combatting inflation. This week, the US Consumer Price Index (CPI) for December, which measures changes in the cost of essentials such as food, housing, utilities and other needs, like petrol, was up seven per cent, the highest annual increase in nearly 40 years.
In the same time, U.S. wages rose by five per cent nominally year-on-year, a similar story played out in Australia, with the CPI until September 2021 rising by three per cent for the year, and wages rising by 2.2 per cent.
What does this mean? It means that the cost of living has increased, and wages are not keeping up with that cost, causing people to have less money in real terms, and a subsequent lower standard of living because of that.
Crypto is seen as a highly speculative asset, so consumers taking their money out of turbulent investments is common when facing an uncertain financial climate.
It should be mentioned, our market wrap tracks the top five cryptos by market cap, excluding stablecoins. Tether, a USD stablecoin, is number four in market cap, and USD Coin, a stablecoin by cryptocurrency exchange Coinbase, is in the number six spot, topping Cardano since at least 6th January 2022.
Such large market caps by stablecoins could mean that traders have been swapping their cryptos to a reserve currency backed asset to save their investments from the ongoing price fluctuations, whilst keeping their funds readily available to swap back into other assets.
The overall sentiment of the market can be seen in the Crypto Fear and Greed Index, which analyses emotions and sentiments in the market and rates them out of 100. The index is currently sitting at 21 out of 100, well within the “Extreme Fear” territory.
Bitcoin traded mostly sideways around US$42,000 this week, seeing support around US$41,000, and dipping to a low of US$40,655. The price saw gains of 3.4 per cent on Wednesday afternoon, and overnight into early Thursday morning, jumping to a high of US$44,142. At the time of writing, $BTC is down 2.2 per cent over the last seven days.
Ethereum has had a turbulent week, it started at a high of US$3,416 before falling 12.3 per cent over the weekend, almost hitting US$3,000 before seeing support. Since its low of US$3,011 on Tuesday, the price pushed by 11.9 per cent, almost putting it back into US$3,400 territory by early Thursday morning. $ETH has been retracing since early Friday (14th Jan) morning, and is down 8.3 per cent per cent on the week.
Binance Coin had a steady decline from Friday through to Tuesday, sliding 13.2 per cent and hitting a low of US$415. Since then, the price climbed to reach a high of US$489 early Thursday, subsequently only causing a 0.1 per cent fall over the last seven days.
Solana traded mostly sideways this week, fluctuating between US$135 and US$145, gains on Wednesday and Thursday pushed $SOL to a high of US$157 at 2am Friday (14th). At the time of writing, Solana has dropped below its price of US$150 in which it started the week, resulting in a negative 2.8 per cent fall over seven days.
In a similar pattern to $BNB, Cardano declined through the early part of the week to hit a low of US$1.11 on Tuesday, then climbing 18.7 per cent to hit a high of US$1.34 by lunchtime Thursday. It has since been regressing, losing six per cent in the past 24 hours, and is down three per cent on the week.