The crypto correction accelerated on Thursday after the world’s top two digital assets failed to retain key price levels. Bitcoin (BTC) fell below $47,000 for the first time since 21 December, and Ethereum (ETH) dropped below $3,700.
Overall, the crypto market capitalization lost approximately $100 billion in the last 24 hours. The value of the digital currency market now stands at $2.19 trillion, the lowest level in nearly 10 days. In November 2021, the crypto market cap touched an all-time high of $3 trillion.
Along with the plunging market cap, the dominance of Bitcoin and Ethereum has dropped sharply in the last few days. BTC’s market dominance reached 40.4% while Ethereum witnessed a drop of more than 2% in its market dominance since the start of this week. ETH now accounts for 20% of the crypto market cap.
Despite the recent plunge, long-term investors are optimistic about the future of the crypto market. According to them, fundamental indicators of BTC and ETH are still looking strong and low volumes during the holiday season indicate that a turnaround in market sentiment is near.
Bearish Sentiment?
The crypto market saw bearish sentiment since the start of December 2021. With a market cap drop of around $800 billion, December remains to be one of the worst-performing months for digital currencies.
“It means there are people that are immediately 'panicking' about the crash. Maybe they are fixing profits for the year for tax optimization purposes. People [are] selling now because they believe it can dump lower. It's a sign of bearishness. There are enough people that believe BTC will not go higher the whole [of] next year. They sell now because they don't feel confident holding BTC,” the crypto analytics platform, Santiment noted.
“Every week since November we are seeing a lower high in terms of daily circulation. The amount of Bitcoin being used over the network is clearly declining. So, things like NVT ratio are going to start to look red,” the company added.
