Crypto Market Decline Hits Lowest Point in Eight Months, Analysts Predict Further Downturn

The total crypto market capitalization has decreased to $2.93 trillion, reaching its lowest level since April, wiping out most gains seen this year. Analysts have expressed a bearish outlook, expecting continued declines in the near term.

The market valuation has dropped by approximately 33% from its peak of about $4.4 trillion in early October. It’s also down nearly 14% since the year began, leading many experts to assert that a bear market is in progress.

On April 9, the market hit a low of $2.5 trillion before rebounding to reach all-time highs six months later. However, since March 2024, the market cap has remained relatively stable, now returning to the middle of that range.

Bank of Japan Raises Interest Rates

Michaël van de Poppe, co-founder of MN Fund, predicted on Friday that the downturn will likely persist until the Bank of Japan announces its interest rate decisions. The central bank increased rates to 0.75% on Friday, prompting some analysts to suggest this may negatively impact crypto. Interestingly, Bitcoin (BTC) saw a 2.3% increase in response.

“Wouldn’t be surprised if BTC continues to cascade and gets itself into a form of capitulation in the next 24 hours, as the trend clearly is down,” said van de Poppe. “That would mean -10/20% movement on altcoins, which should then bounce back quickly.”

Decline Offers Buying Prospects

Nick Ruck, director of LVRG Research, mentioned that the recent dip in market capitalization reflects broader corrections caused by macroeconomic influences and a reduced risk appetite among investors.

“This pullback provides potential accumulation opportunities for fundamentally strong projects as the sector matures and attracts institutional investments,” he indicated.

Social Sentiment at an All-Time Low

According to Blockchain analytics platform Santiment, crypto sentiment is hitting fear levels once again, with negative commentary dominating social media following a small pump-and-dump on Thursday.

“Commentary is mainly showing fear after Bitcoin rose to $90.2K yesterday and then quickly fell back to $84.8K,” it reported.

Santiment highlighted that historically, it’s a strong indicator when retail investors adopt a more negative outlook than a positive one.

“Prices move opposite to the crowd’s expectations, so this volatility, marked by fear, signals a good opportunity for patient investors to endure this phase.”

Currently, the crypto Fear & Greed Index is at 16, indicating ’extreme fear,’ remaining below 30 in ‘fear’ territory since early November.