Investors are often interested in large round numbers, and the $1 trillion total market capitalization of cryptocurrencies is no exception. A 48-day holding period before the level’s collapse on March 9. The indicator dropped to $914 billion, its lowest level since January 13, following a 16-hour negative 8.6% price movement.
The stability of the American financial sector is a subject of growing concern. The demise of Silvergate Bank and its closure, as well as Silicon Valley Bank’s (SVB) closure by the California Department of Financial Protection and Innovation, are a few of the factors that contributed to the cryptocurrency market’s decline below the $1 trillion market size threshold. A crucial fiat gateway network for cryptocurrency exchanges and middlemen was called Silvergate.
SVB’s closure was not explained by the California Department of Financial Protection and Innovation. Nonetheless, it predicted that the financial institution would fail in 2023, becoming the first FDIC-insured institution to do so.
Financial services were given by Silicon Valley Bank, which has assets of over $200 billion, to a number of venture capital companies with a focus on cryptocurrencies, including Andreessen Horowitz and Sequoia Capital.
Keep in mind that the U.S. Federal Reserve is still working to reduce inflation, and that this includes raising interest rates above 2% in August 2022 and shrinking its balance sheet through asset sales. Meanwhile, data on the American labour market released on March 10 showed that 311,000 new jobs will be added in February 2023, confirming the idea that the Fed’s anti-stimulus actions call for stronger defences.
Unexpectedly, a longer and more severe economic downturn is more likely as a result of the central bank’s cautious approach. The inverted bond curve reached its highest level in forty years as a result of investors’ increased demand for two-year treasury notes compared to longer-term dated bonds.
There was a noticeable jump as the overall value of cryptocurrencies topped $920 billion, signalling significant purchasers at that point, which may seem unimportant at first but is crucial for Bitcoin, the most popular cryptocurrency. When stablecoins are not included, Bitcoin makes up about half of the total capitalization of cryptocurrencies.
So, the $920 billion total is built around Bitcoin’s $380 billion market valuation. This level is crucial from the perspective of valuation for three reasons.
With a market cap of nearly $380 billion, Bitcoin is still one of the top 20 global tradable assets, ranking above Walmart, Mastercard, and the tremendously successful Procter & Gamble. With such a spectacular achievement, it becomes increasingly challenging to assign blame for failure.
Bitcoin’s performance is comparable to that of billion-dollar companies like Credit Suisse, which has declined by 63%, First Republic Bank, which has declined by 51%, Warner Bros. Discovery, which has declined by 43%, and Intel Corporation, which has declined by 43%, despite its 50% decline in a year to $19,650.
Last but not least, it continues to be the seventh largest global base money in terms of fiat currencies by keeping its $380 billion capitalization. For instance, the monetary supply of the Australian dollar is $378 billion, while that of the Canadian dollar is $220 billion. The next probable target is the Indian Rupee, which has a $500 billion monetary base.
By observing whether greater activity is taking place in call (buy) options or put (sell) options, traders can determine the mood of the market. Call options are typically employed for optimistic tactics, whereas put options are utilised for bearish ones.
A bullish put-to-call ratio of 0.70 shows that put option open interest trails more call options. A 1.40 indicator, on the other hand, favours put options and is a bearish sign.
