The crypto markets have been trading in the red for the last one week. Bitcoin, the largest crypto token by market cap, was down 9.39 per cent and was trading at $26,360, according to data on coinmarketcap.com. The total market cap has fallen from $1.2 trillion last week to $1.10 trillion on Friday.
Experts said that there are several factors behind the fall in prices.
Alankar Saxena, CTO and co-founder of crypto platform Mudrex, said that the factors included Binance pausing withdrawals for some time and Bitcoin fees having decreased after days of surging prices, leading to a delayed selling from market participants and an ongoing banking crisis in the US.
“Multiple factors are being speculated as the reasons behind the fall in prices, including increasing network congestion, rising transaction fees, and even an incorrectly tagged US Government wallet dumping a large position in a huge sell order on Wednesday,” said Parth Chaturvedi, investments lead at CoinSwitch Ventures.
During the week, the prices of crypto tokens dropped sharply after news broke of the US government selling 9.8K BTC worth $277 million.
“Ethereum (ETH), the second-largest cryptocurrency, followed a similar pattern, dropping nearly 5% below the $1800 level,” said the research team of the crypto trading platform CoinDCX.
Chaturvedi said that there is a cautious overhang across the market.
However, experts were also positive about the holdings of crypto among investors.
“On a positive note, the amount of Bitcoin held on digital asset exchanges has plummeted to 5.84 per cent, the lowest point in the past five and a half years. This suggests that more holders are preferring to store their crypto on cold wallets rather than dealing with exchanges. The last time figures were that low was in December 2017, indicating a potential shift in the behaviour of long term holders. This trend may lead to greater security and stability in the market,” the research team of CoinDCX added.
“The next major support would be at the $26,000 level and resistance at the $27,300,” Saxena added.
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