Crypto Market Suffers Largest Drop Since 2022, as BTC Drops Briefly Below US$50K

The total crypto market cap has dropped below US$2 trillion (AU$3tn) as of writing, but yesterday reached as low as US$1.7 trillion (AU$2.6tn). Bitcoin and Ethereum took heavy losses, as did the whole crypto market.

Related: Japanese Market Sees Worst Losses Since 1987, Traders Blame Carry Trade for Crypto Crash

While the drop saw a rise in Bitcoin dominance to 60%, the price for BTC fell as low as US$49,513 (AU$75,781) at 4:25 PM local Australian time on Monday.

The dip is the largest the crypto sector has seen since the 2022 FTX debacle, which had sent shockwaves through the market. Analysts at Santiment said the recent drop has been acknowledged but hasn’t caused the widespread panic expected for such a notable downturn.

According to the analysts, this suggests that while fear is present in the market, causing traders to be cautious, it’s seen as a positive indicator of more measured and thoughtful investment behaviour.

Analyst Says “Tech Stock Believers” Panic-Sold

Is Bitcoin a tech stock or a form of digital gold? The answer is clear, according to founder and CEO of CryptoQuant, Ki Young Ju, who says those who didn’t believe in the digital gold narrative sold in panic, switching to physical gold.

But according to the analyst, that’s okay – while Bitcoin investors are undecided about what BTC really is, tech stock believers are not necessary for the space, he adds.

We don’t need them. BTC should rise in tough times—that’s Satoshi’s original intent.

Ki Young Ju, founder and CEO, CryptoQuant

Some, like the CryptoQuant CEO, argue that the panic sellers are not aligned with the original intent of Bitcoin’s creator, Satoshi Nakamoto. His vision of Bitcoin was that of a decentralised currency capable of providing stability and efficiency, particularly in challenging times

Bitcoin As a Hedge Against Market Downturns?

According to this view, Bitcoin should ideally rise in value during economic uncertainties, serving as a safe harbour akin to gold during financial crises.

Related: Experts Call for US Fed Emergency Rate Cuts to Avoid Further Market Chaos

While BTC initially crashed with the market and reacted more strongly than traditional assets, it has since begun its rally towards recovery. This suggests that it may still take some time for BTC to mature into the global hedge that many anticipate it will become.

After all, 2024 is the year that has seen institutions like banks, wealth managers and pension funds starting to put some of their funds into BTC. The recent announcement by Morgan Stanley to offer their clients access to Spot Bitcoin and Ethereum funds through their 15,000-strong advisory team is just one more example of the continuing adoption of BTC.