The weekend brought a volatile ride to the crypto market as bitcoin (BTC) and ethereum (ETH) took a tumble and left investors and traders alike scratching their heads.
On Feb. 6, BTC was trading at $22,886, reflecting a 2.5% drop in the last 24 hours; a steeper decline was seen for ETH, which plummeted by over 2% and hovered around $1,634.
Looking at the weekly price action for ETH and BTC, ETH is more stable than BTC, which may shield it from further price fluctuation. Nonetheless, the crypto market will likely remain unpredictable as several factors are still in play.
What’s causing the volatility?
The crypto banking world was shaken on Feb. 4 as Silvergate Capital (SI) shares plummeted by more than 10% after the company reported a staggering $8 billion drop in customer deposits.
At the end of December, total digital asset deposits held by Silvergate had declined to $3.8 billion from its previous high of $11.9 billion in September.
Desperate to maintain liquidity, Silvergate was forced to take a loss of $718 million in Q4 after selling off $5.2 billion worth of debt securities.
Despite earlier claims that Silvergate had no outstanding loans or investments in FTX, the drastic decline in its shares over the days had traders speculating that the two could be related.
To add insult to injury, the US Attorney informed a bankruptcy court on Feb. 1 that prosecutors had seized bank accounts at Silvergate and Farmington State Bank in the Bahamas associated with FTX Digital Markets, leaving customers wary of trading in the already volatile market.
Moreover, trading volumes over the weekend likely contributed to the crypto market’s decline, as lower liquidity can cause prices to become more volatile and traders to become more cautious.
With fewer buyers and sellers, it can be difficult for traders to enter and exit positions, leaving those who choose to trade exposed to more risk.
This lack of confidence in the market can lead to further downward pressure on prices as traders opt to stay on the sidelines.
Biggest gainers and losers
SingularityNET (AGIX)
Last week saw a stunning surge in the price of SingularityNET (AGIX), making it the 79th biggest crypto with a market cap of $486 million.
On Feb. 6, the token was trading at a whopping $0.4076 – up 130% from the previous week. But why are people drawn to this relatively unknown token?
The answer lies in its mission to create an AI marketplace hosted on the blockchain – giving users access to all the advantages of artificial intelligence (AI).
It’s no surprise that the project has been gaining traction, especially with the increasing popularity of AI-based projects like ChatGPT. With that in mind, the success of SingularityNET in the coming days will be a trend to watch.
The Graph (GRT)
Since the start of the year, The Graph (GRT) token has been a bullish force to be reckoned with.
Last week saw even more significant gains, as the token rose 37%, pushing its trading price to $0.1285 and securing it the 46th spot among the biggest 50 cryptocurrencies.
A recent Messari report revealed impressive metrics for the Graph in its core areas, like a 265% increase in query fee revenues in 2022, suggesting strong growth ahead.
This solid fundamental growth indeed grazed the overall optimism among investors, helping the GRT token to hit new heights.
Aptos (APT)
Investors should be wary as the recently formed Aptos (APT) crypto continues to gain traction.
The token surged to an all-time high of $19.90 on Jan. 26, only to lose around 20% of its value in the following days and now trading at $15.01 as of Feb. 6.
One key factor indicates that the crypto’s price could suffer a sharp reversal in February:
86% of all Aptos tokens (856.3 million APT coins) are still locked, with a $75 million unlocking event expected in the next 15 days. Whales holding most of these coins will likely take profits, resulting in a pullback.
Hence, investors should be mindful of price manipulation and keep track of APT’s price charts and whale activity.
What to expect in the coming days?
As the Biden administration attempts to place more significant regulatory pressure on the crypto markets, traders and investors of cryptocurrency are met with an uncertain future.
The prices of cryptocurrencies have seen extreme fluctuations throughout the past year, and further volatility can be expected going forward.
Moreover, the correlation of crypto assets with traditional holdings such as stocks has grown significantly, potentially placing the crypto markets at risk of contagion to other sectors of the global economy.
Meanwhile, with the global economy currently in a late-cycle expansion phase, the chances of experiencing a recession remain high.
Given these conditions, investors are encouraged to remain alert and be prepared to react to any sudden changes in the crypto markets. They should monitor the global economic environment and approach the markets with caution.
Source: https://crypto.news/singularitynet-agix-shines-bright-while-the-market-bleeds-red/