Crypto market capitalization rises, but some regulatory announcements sound.
In November 2021 the crypto market capitalization led by Bitcoin, Ethereum, and BNB reached $3 Billion. The leading coin, Bitcoin, almost hit $70k. However, the bearish cycle subsequently began and lasted for months. A stage which we can classify as the crypto winter and still live.
Today the market capitalization of cryptocurrencies moves below the Trillion Dollars. In the last few hours, most of the top 100 cryptocurrencies have seen a recovery. After the previous bear days, that threatened to take many of the big cryptos to yearly lows.
The market capitalization, in fact, increased to levels close to 4.57% since the previous day, according to CoinMarketCap. Currently, the overall cryptocurrency market capitalization is around $978 billion.
All this while the dominance of Bitcoin moves between 37%. The total trading volume in the cryptocurrency market in the last 24 hours stands at $69 billion (approximately 19% less than the previous day).
Despite the speech and announcements of the FED and the ECB, the crypto market capitalization is optimistic: its great protagonists, Bitcoin and Ethereum, are in profit compared to yesterday. BTC looks to consolidate around $19,000. While Ethereum seems consolidated at $1,600.
Behind today’s optimism is The Merge, the upgrade to Ethereum 2.0. Therefore, it is likely that there will be corrections as the FOMO created around this event decreases.
Fed Beats the Drums of Regulation
Federal Reserve Chairman Jerome Powell announced Thursday another interest rate hike of 75 basis points. He has also referred to cryptocurrencies with words such as:
“Digital currencies that are not issued by banks seem to not have much to offer. They’re not very good at storing value.”
“We want to be in favor but also create an appropriate regulation.”
Powell also said that the US central bank is not going to back down on efforts to curb inflation:
“We need to act now, frankly, forcefully, as we have been doing.”
For its part, the European Central Bank also raised its interest rates by 75 points, the highest level in its history. The intention of this decision is likewise to curb inflation and mitigate the expected price rise of 8.1% in 2022.
However, the drums of cryptocurrency regulation have been beating loudly for several days. Fed Vice President Michael Barr had previously referred to Jerome Powell’s announcements.
In fact, this morning The Washington Post published a report in which it reports that the United States Department of the Treasury will publish a statement that cryptocurrencies represent a financial risk that they outweigh the benefits. This is a call for Congress to act on it.
It is worth noting that there are already several bills circulating in the United States Congress. The House Financial Services Committee announced in early September that it will run a session on markup in stablecoins.
Optimism May Just Be Residual
The crypto market capitalization is bullish. However, bulls should keep in mind that some residual optimism is likely to be seen on this day from the Ethereum upgrade. Therefore, the current moves are likely to be followed by corrections.
Faced with the rise in interest rates, the increase in the value of the dollar is inevitable, which drives the cryptocurrency market lower.
Crypto investors must wonder about the market sentiment after “The Merge” update. What will then be the factor that drives optimism?
Stakeholders also have to be on the lookout for regulations that arise. Although it is doubtful that these are draconian and that the “lobbies” do the job well enough in the halls of Congress.
Will the crypto market cap drop after that? At the moment the only thing to do is wait.
By Audy Castaneda
