Key ideas:
- It’s a bearish week for the broader crypto market, with Bitcoin (BTC) falling 10% to visit below $35,000 for the first time since February.
- Investor angst over inflation and the Fed’s monetary policy affected appetite for riskier assets, spilling over into the cryptocurrency market.
- Several cryptos bucked the trend on the week, including Algorand (ALGO), which ended the week up 25%.
Bitcoin sinks below $35,000 as bearish sentiment hit the crypto market in the week ending May 8, 2022. Risk aversion stemming from inflation and investor sentiment towards the Fed’s monetary policy hit the higher risk assets.
The correlation between bitcoin (BTC) and the NASDAQ 100 strengthened on the week. As a result, the NASDAQ sell-off sent the broader crypto market into a tailspin.
The cryptocurrency sell-off saw $146 billion disappear to leave the total cryptocurrency market capitalization at $1.571 billion on Sunday afternoon.
Bitcoin (BTC) sends the crypto market into a tail spin
In the week ending May 8, BTC is currently down 10%. After a 2.49% loss from the previous week, it looks like BTC will end the week below $35,000. At the time of writing, BTC stood at $34,603. It will be a fifth consecutive week in the red for BTC.
After recovering from a January sell-off, BTC rallied back to $48,000 levels in late March before the current reversal.
Reports of bitcoin whales selling bitcoin added to market angst over the weekend, with the Bitcoin Fear & Greed Index sliding into the “Extreme Fear” zone.
The Index was in the “Greed” zone, trading at 60/100 on March 28 before falling to 18/100 on May 8.
BTC wallet data suggests that the current downtrend in global equity markets is causing BTC holders to reduce exposure to riskier assets and meet potential margin calls.
On Friday, CryptoQuant reported that the number of wallets with between 10 and 10,000 BTC sent more crypto to exchanges than wallets with between 0.01 and 10 BTC.
Things were no better for the rest of the top ten cryptos.
Broader Crypto Market Tracks Bitcoin in Red
In the week ending May 8, Terra (LUNA) was down 25.5% to lead the decline, with SOL falling 13.4%.
BNB (-8.9%), AVAX (-11.4%) and ETH (-10.0%) are also in deep red, while ADA (-6.6%) and XRP (-6.3%) ) experience relatively modest losses.
For LUNA, several factors beyond the influence of bitcoin contribute to the big loss. These included LUNA sales to support the TerraUSD (UST) peg, a marked decline in total value locked, and investor sentiment towards Luna Foundation Guard’s (LFG) latest $1.5 billion BTC purchases.
However, several cryptos managed to buck the trend, with Algorand (ALGO) rallying 25.1% to grab the headlines.
Algorand (ALGO) sees strong stake demand to support a breakout week
According to Defi Llama, Algorand’s total value locked (TVL) rose 19.4% to $187.36 million for the week.
Rising demand for ALGO as a staking crypto provided the edge on the week, with Algofi, a DeFi platform on the Algorand blockchain, seeing its dominance hit 61.22%. Users can lend SOMETHING on the Algofi protocol to earn SOMETHING.
ALGO is a popular stake cryptocurrency as ALGO holders can stake as little as one ALGO to earn interest.
Earlier in the week, Algorand was in the news for a completely different reason. On Monday, FIFA announced Algorand as an official partner ahead of this year’s FIFA World Cup in Qatar.