U.S dollar gravity crushes crypto market as over 75,500 investors lose money
Many altcoins, and even the pioneering crypto asset, Bitcoin, have suffered price drops largely due to the rising greenback, as the US tapering talks has helped the Dollar Index rebound.
The dollar rose to a nine-month high against its major peers on Thursday even as the Federal Reserve is expected to start tapering its huge stimulus this year.
The dollar index rose 0.26% to 93.464 against six major rivals, its highest level since Nov. 5. There were 75,517 liquidations for the day. One of the heaviest liquidations was on Bybit-BTC, valued at $1.55 million.
Over the past five days, crypto stocks have lost $100 billion, falling to $1.90 trillion at the time of this report. The FTX exchange recorded Bitcoin trading at $44,121 with a market cap of $853 billion.
The pioneer Crypto dominance level is currently 43.83%, a decrease of 0.46% over the day.
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Consequently, according to the latest report from the International Monetary Fund, central banks held a record amount of dollar reserves at the end of last year – a little over $7 trillion, thereby suggesting the U.S dollar continued to retain its safe-haven status.
When measured, the decline of the dollar at the beginning of the pandemic boosted other reserves. However, the dollar holdings have risen faster in the past two years than the total Chinese yuan reserves.
Market indicators also show the confluence of a dollar short squeeze, an increase in delta variant cases, and growing geopolitical certainty have all pushed the dollar to a rebound.
With Bitcoin demand rising and confidence returning, breaking below the $45k zone might likely tame strong indications for the continuation of the bull run.
It is still advised that investors exercise caution when it comes to investing in cryptocurrencies since they are volatile assets. Before investing, it is advised to use the dollar-cost averaging approach.
