Quick Market Overview (26 Nov - 7 Dec)
Total Crypto Market Capitalization (Source: CoinGecko)
The crypto markets have been seeing a sea of red over the past couple weeks. Total crypto market capitalisation has shed close to half a trillion US dollars since the Omicron variant was named on November 26.
Bitcoin Market Price (Source: CoinGecko)
Bitcoin has similarly depreciated against the US dollar over the same time period, with a significant dip occuring on December 4th, where Bitcoin dropped close to $10,000 (~16%) in about the span of an hour, before slightly recovering and closing the day at an approximately 8% drawdown.
The dip likely resulted from a confluence of factors. Inflation and tapering fears in the US had already emerged months prior, and further accentuated by recent pronouncements from the Fed that the current inflation levels may not be ‘transitory’. While within the cryptoverse, there were also growing talks of the market already at the top. The announcement of the new Omicron variant added another factor adding to increased uncertainty, likely accelerating risk-off behaviour from investors.
Flash crashes similar to what happened during the May crash and on December 4 could also likely be attributed to cascading liquidations of the extensive leveraged positions in the markets, making regular shake-outs more violent than they otherwise would be.
With that said, we take a look at different segments of the market to see how they reacted to this dip.
