No, thanks to the deteriorating macroeconomic conditions, the cryptocurrency market took another hit in the last quarter report shown by Cryptorank (an analytics platform).
After the sharp decimation in the prices of many cryptocurrency assets that plagued the first half of the year, the third quarter began with a positive price correction for many assets.
The global cryptocurrency market cap rallied and consolidated above the $1 trillion mark. The prices of leading assets like Bitcoin [BTC] and Ethereum [ETH] rose 18% and 56% respectively in the first 31 days of the third quarter.
However, as the quarter progressed, the market deteriorated, and as Cryptorank noted, “even major events like the Ethereum merger failed to result in significant positive moves.”
BTC within the 90-day period
According to Cryptorank, the leading cryptocurrency BTC suffered a 2% price drop between July and September. While the price surged 18% in July, BTC lost most of its gains between August and September.
Source: Cryptorank
This resulted in the quarter ending below the $20,000 price region. As noted in the report, “Cryptocurrencies have generally performed poorly over these two months.”
September is known to have been one of the worst months for BTC historically. The asset’s price “has fallen 8.5% on a monthly average over the past five years.”
Source: Bloomberg
Cryptorank further found that BTC’s correlation with traditional financial markets recovered in the third quarter, causing it to approach an all-time high.
As a result of this correlation, the asset’s “linkage to the global macroeconomic situation has increased significantly,” making it “vulnerable to announcements such as inflation data or Fed rate hikes.”
For example, at the last Federal Open Market Committee meeting on Sept. 21, when the third straight rate hike of 75 basis points was announced, the price per BTC fell sharply by 4.7% minutes after the announcement.
Source: Cryptorank
On the main culprit responsible for BTC’s severe price volatility over the last quarter, Cryptorank explained:
“The ongoing crisis in the financial markets is one of the most important factors currently affecting bitcoin and, more broadly, the broader cryptocurrency market. Bitcoin may be a deflationary tool (its supply is limited and is gradually declining, making the coin more valuable), but in the current macroeconomic situation, it is showing negative performance due to rising inflation.”
Source: Cryptorank
In particular, Bitcoin shows a statistically significant positive correlation with several other cryptocurrency assets. It is undeniable to deny the negative impact that sustained BTC price volatility would have on the broader cryptocurrency market.
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