Mumbai: Indian crypto investors continued to be under stress, anticipating that the worst may not be over for the crypto market, which recorded one of the worst crashes in the history of digital assets in the past week and wiped off a few hundred crores from the Indian crypto market.
The world’s most popular digital currency, Bitcoin, broke the important $20,000 support level and even touched $18,000 on Saturday, its lowest level since December 2020.
After reaching an all-time high of $68,789.63 in November 2021, Bitcoin has lost more than 70% of its value.
The second largest digital token by value, Ethereum, went below $1000 for the first time since Jan 2021.
The total market capitalisation has fallen to below $900 billion in a chaotic week.
And given the miserable week that went by, the worried Indian investors are bracing for a further shock.
“We’re in an extensive bear market after almost 5 years. Almost everyone experiencing it for the first time is extremely paranoid and tries to catch the bottom. Most of the altcoins won’t get back after this ends, but those who are holding and accumulating bitcoin will be rewarded for their patience in the coming years, “said Chahal Verma, a Gurgaon-based retail investor.
All popular coins have dipped sharply in the last week as investor appetite soured.
At 4.30 PM Sunday on Coinmarketcap, the 7 day performance of major digital assets was as follows: Bitcoin was down by 27.94% at ($19,815), Ethereum crashed 27.34 % ($1057), Binance coin dipped 19.46 % ($207.19), Avalanche recorded 16.83% erosion ($15.24) and Cardano lost 8.5 % ($0.4693). The popular meme coins were also severely impacted, with Shiba Inu down 8.420 % ($0.00000799) and Dogecoin 11.18% ($0.05807).
The current bloodbath is part of a larger market slide due to high inflation, rising interest rates, the Ukraine-Russia conflict and fear of a looming recession.
Last week, the Federal Reserve increased interest rates by 75 basis points, leading to value erosion across asset classes.
Specifically, the crypto asset class has also been impacted by the collapse of two major tokens—Terra Luna and Celsius. The US dollar pegged stablecoin Magic Internet Money also lost its peg against the dollar in the last couple of days. Crypto hedge fund Three Arrows Capital said it was seeking an asset sale or a bailout after incurring big losses.
As the bear grip tightens on the market, Indian investors who succumbed to FOMO (Fear of Missing Out) and invested in crypto assets are having to make difficult choices—wait for a long period to recoup losses or quit by booking heavy losses. “I was caught in the crypto mania last year after some coins had given great returns in just a few months. I was a short-term investor, but with deep losses now I have no option but to be a long-term investor,” said Delhi-based Gopala Somani, a retail investor.
As investors watch their portfolios lose value in the current bear rout, they have been on the sidelines.
The exchanges have also been recording lower volumes as few new investors, who make up the bulk of their clientele, are buying the dip.
“BuyUcoin has witnessed around 70% dip in daily transactions from May 2021 vs May 2022 and 10% dip viz a viz last month. Seasoned investors continue to hold on to their investments while buying into the dips to correct some of their asset positions. Similarly, a few crypto-enthusiastic retail investors who joined the bandwagon during bull cycles are also dollar-averaging out their previous positions in the market through tools like Systematic Crypto Investment Plans (SCIPs),” said Shivam Thakral, CEO, BuyUcoin.
According to data from Coinglass at 5.20 PM, the total liquidations in the crypto market in the last 24 hours stood at $483.18 million.