- Cryptocurrency traders are showing signs of renewed confidence with the market cap of digital assets rising US$280 billion in July after a painful sell-off and credit crisis that had scared many players out of the market.
- In recent weeks, the market capitalisation of the 500 biggest tokens recovered to above US$1 trillion, up 30% in July which proves that the market has shown tentative signs of recovery.
The digital asset industry has experienced a period of sharp declines that culminated in the collapse of Terra and its sister token Luna — once one of the industry’s largest stablecoins — and prompted the failure of several prominent crypto hedge funds and lenders such as Three Arrows Capital and Celsius Network.
Bitcoin fell as much as 70% from its all-time high in November, while the size of the digital asset market dipped below US$1 trillion, down from a November high of over US$3 trillion.
However, with the market cap of digital assets rising US$280 billion in July after a painful sell-off and credit crisis that had scared many players out of the market, cryptocurrency traders are showing signs of renewed confidence.
According to data from cryptocurrency asset management group CoinShares, investment products tracking cryptocurrencies have pulled in just under US$400 million since the start of July, racking up the longest run of sustained weekly net inflows since March of this year.
In recent weeks, the market capitalization of the 500 biggest tokens recovered to above US$1 trillion, up 30% in July which proves that the market is starting to show tentative signs of recovery.
Ether, the second-largest cryptocurrency by market cap, rallied 40% last week, triggered by the network’s developers announcing a tentative date for a massive software update.
Investors and developers are calling its upgrade “the Merge,” and it will change how transactions on Ethereum are ordered, making it more efficient and sustainable for widespread use.
According to CoinShares, inflows and improving token prices have boosted total assets under management in cryptocurrency investment products back to early June levels of US$30 billion.
However, investors should remain cautious as the market could easily come crashing down again given the current macro environment and overall weak sentiment.
