Bitcoin’s momentum seems to be waning as its dominance in the cryptocurrency market drops to 49.77%. This comes after the holiday season of 2023, during which Bitcoin experienced a surge in popularity. The CoinMarketCap Fear & Greed Index currently stands at ‘Neutral’ (56 out of 100), a significant decrease from the ‘Greed’ level seen last week. With the decline in excitement around Bitcoin spot exchange-traded funds (ETFs), it is expected that Bitcoin and other major coins will trade sideways in the near future.
It is important to note that the cryptocurrency market is highly volatile, and predicting its future behavior is challenging. This article aims to provide investors with an understanding of the current market conditions and major events that have occurred or are upcoming. Investors are advised to conduct their own research before making any investment decisions.
Last week, the overall market cap of the cryptocurrency market was $1.68 trillion, with Bitcoin priced at around $42,500 and Ethereum priced at around $2,500. However, the market cap has dipped to $1.62 trillion in the span of a week.
The decentralized finance (DeFi) market currently accounts for 11.11% of the total 24-hour market volume, with a total volume of $4.1 billion. Stablecoins make up a similar percentage, with an overall volume of $32.46 billion. The Fear & Greed Index, as per CoinMarketCap, has gradually declined over the past week and currently stands at ‘Neutral’ with a score of 56.
Bitcoin reached a high of $43,515.41 and a low of $40,360.97 in the past seven days. Meanwhile, Ethereum experienced a high of $2,478.82 and a low of $2,413.33.
JPMorgan, a global investment bank, has expressed concerns about potential capital outflows from Grayscale’s Bitcoin fund. It suggests that this could exert further downward pressure on Bitcoin prices in the coming weeks. The bank also highlighted the shift from existing Bitcoin investment instruments to more cost-effective spot Bitcoin ETFs, indicating a trend among retail investors transitioning from digital wallets held with exchanges/retail brokers.
Similarly, Morgan Stanley raised concerns about the diminishing dominance of the US dollar due to growing interest in digital assets, including Bitcoin. The report emphasizes a general movement away from relying solely on the US dollar, coinciding with an increasing interest in stablecoins and central bank digital currencies (CBDCs).
In a positive development, Grayscale Investments released a report highlighting the transformative potential of the alliance between artificial intelligence (AI) and cryptocurrency. The report notes the success of AI-associated crypto assets, expanding the applications of blockchain beyond conventional payment systems. This convergence has the potential to address challenges related to AI, such as data privacy and power concentration.
According to Mudrex co-founder and CEO Edul Patel, Bitcoin is currently stable around $41,000, indicating a possible sideways trend between $41,000 and $42,000 in the coming week. Ethereum, on the other hand, may face a decline if it fails to regain control above the $2,500 mark.
In conclusion, Bitcoin’s momentum appears to have declined, with its dominance in the cryptocurrency market dropping to 49.77%. Several factors, such as the decline in excitement around Bitcoin ETFs and the potential for capital outflows from Grayscale’s Bitcoin fund, have contributed to this trend. Additionally, concerns about the waning dominance of the US dollar and the transformative potential of the AI-cryptocurrency alliance have emerged. Investors are advised to stay cautious and conduct thorough research before making any investment decisions in the volatile cryptocurrency market.
