The global cryptocurrency market extended its downward trend this week as investor sentiment remains bearish amid growing macroeconomic concerns and regulatory uncertainties. Bitcoin, the world's largest digital currency by market capitalization, dropped below the $114,000 mark, marking a significant retreat from its recent all-time highs.
Bitcoin (BTC) fell to approximately $113,700 on Thursday, representing a decline of over 6% in the past seven days. This drop comes after the cryptocurrency briefly surpassed $120,000 earlier in March, fueled by the approval of spot Bitcoin ETFs in the United States and optimism surrounding the halving event expected in April 2024.
Market analysts attribute the current downturn to several factors, including rising U.S. Treasury yields, a stronger U.S. dollar, and increased caution among institutional investors. Additionally, recent regulatory actions in major markets such as the European Union and China have heightened concerns about the future of digital assets.
Ethereum (ETH), the second-largest cryptocurrency, also followed the downward trajectory, slipping below $3,500 — a drop of nearly 8% compared to the previous week. Other major altcoins, including Binance Coin (BNB), Solana (SOL), and Cardano (ADA), recorded losses ranging from 5% to 10%.
"Despite the long-term optimism surrounding Bitcoin's halving, short-term pressures are weighing heavily on the market," said Sarah Mitchell, senior analyst at Digital Asset Insights. "Investors are becoming more risk-averse, especially with inflation data and interest rate decisions remaining unpredictable."
Trading volumes across major exchanges have decreased, indicating reduced market activity and liquidity. Meanwhile, on-chain data shows an increase in dormant addresses and a slowdown in large transactions, suggesting that many holders are adopting a 'wait-and-see' approach.
The crypto market capitalization has dipped below $2.3 trillion, down from over $2.7 trillion at the beginning of the month. While some experts believe this correction is healthy and necessary after a rapid rally, others warn of further downside risks if macroeconomic conditions worsen.
As the market awaits the upcoming Bitcoin halving — an event historically associated with price volatility — analysts urge investors to exercise caution and diversify their portfolios.
In conclusion, while the long-term outlook for cryptocurrencies remains promising for many, the current downturn highlights the volatility and sensitivity of digital assets to global economic trends and regulatory developments.
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