The Crypto Market Cap is Sinking as Tether Climbs

The cryptocurrency market cap risks falling below $100 billion for the first time time since August 2017, highlighting the rapid exodus from digital assets during the course of the year.

Market Update

Crypto valuations have experienced a meteoric fall over the past six weeks, highlighting a momentous shift in investor sentiment. The cryptocurrency market capitalization has declined a staggering $112 billion since Nov. 14, the eve of the bitcoin cash hard fork. On Saturday, the market cap reached a low of $100.4 billion, as bitcoin and its altcoin peers struggled to break free from the bearish grip.

Losses over the past month have pushed tokens like Zcash, VeChain and ICON toward 95-99% declines from their peak. Bitcoin is also experiencing one of its worst retracements in history, though the leading digital currency has an established precedent of major peaks and troughs that stretch all the way back to 2011.

EOS has emerged as a major loser in recent weeks, as block producers have seen their operational incentives wither away. As Hacked reported earlier this week, block producers were barely breaking even at a price-per-coin of $4.14. EOS plunged to $1.50 earlier this month and was last seen trading at $1.83.

The bear market has enabled Tether to reassert itself as the stablecoin of choice for traders, many of whom are sitting on the sidelines until a definitive bottom has been reached. USDT is currently valued at $1.01 for a total market cap of $1.9 billion. It now ranks fourth among active cryptocurrencies, overtaking Stellar, which has fallen to fifth.

Trends and Considerations

The meltdown of the past six weeks has shaken out weak hands from the market. It has also threatened the resolve of some of crypto’s most ardent supporters. As CCN reported last month, investors who bought bitcoin at $1,000 have liquidated their positions during the latest selloff – the nail on the proverbial head of crypto mania.

So-called ‘crypto winter’ has had a damning effect on blockchain startups and miners. Dozens of blockchain companies have announced significant cuts in their workforce, while others have seemingly disappeared entirely. As many as 1.3 million mining devices have been switched off during the latest leg of the downtrend even as bitcoin’s mining difficulty has fallen sharply.

The loss of bitcoin’s $6,000 price floor – i.e., the break-even rate for miners – has had a major impact on the market. The initial drop below this level seems to have been associated with the bitcoin cash hard fork, but it quickly turned into a technical selloff that entered full-blown capitulation shortly thereafter. All signs seem to show further pain ahead for crypto traders, with bitcoin poised to test the $3,000 psychological support.

Current market trends clearly don’t reflect bitcoin’s long-term potential nor do they account for growing rates of adoption among businesses and institutions. Over the next six months, a clearer picture around regulation and institutional participation will likely reveal itself as the U.S. Securities and Exchange Commission (SEC) rules on a highly touted bitcoin ETF and Intercontinental Exchange and Nasdaq enter the market for crypto futures.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi