- It is a bearish week for the broader crypto market, with Bitcoin (BTC) sliding by 10% to visit sub-$35,000 for the first time since February.
- Investor angst over inflation and Fed monetary policy hit appetite for riskier assets, which spilled over to the crypto market.
- Several cryptos bucked the trend in the week, including Algorand (ALGO), which ended the week up by 25%.
Bitcoin sinks to sub-$35,000 as bearish sentiment hit the crypto market in the week ending May 8, 2022. Risk aversion stemming from inflation and investor sentiment towards Fed monetary policy hit riskier assets.
The correlation between bitcoin (BTC) and the NASDAQ 100 strengthened in the week. As result, the NASDAQ sell-off sent the broader crypto market into a tailspin.
The broad-based crypto sell-off saw $146 billion wiped out to leave the total crypto market cap at $1,571 billion on Sunday afternoon.
Bitcoin (BTC) Sends the Crypto Market into a Tail Spin
In the week ending May 8, BTC is currently down 10%. Following a 2.49% loss from the previous week, BTC looks set to end the week at sub-$35,000. At the time of writing, BTC stood at $34,603. It will be a fifth consecutive week in the red for BTC.
After recovering from a January sell-off, BTC bounced back to $48,000 levels in late March before the current reversal.
Reports of bitcoin whales selling bitcoin added to the market angst over the weekend, with the Bitcoin Fear & Greed Index sliding into the “Extreme Fear” zone.
The Index was in the “Greed” zone, with a value of 60/100 on March 28 before sliding to 18/100 on May 8.
BTC wallet data suggests that the current downward trend across the global equity markets is causing BTC holders to reduce exposure to riskier assets and meet possible margin calls.
On Friday, CryptoQuant reported that the number of wallets holding between 10 and 10,000 BTC sent more crypto to exchanges than wallets holding between 0.01 and 10 BTC.
Things were no better for the rest of the crypto top ten.
The Broader Crypto Market Tracks Bitcoin into the Red
For LUNA, several factors beyond bitcoin’s influence contribute to the heavy loss. These included LUNA sales to support the TerraUSD (UST) peg, a marked decline in total value locked, and investor sentiment towards the Luna Foundation Guard’s (LFG) latest $1.5bn in BTC purchases.
A number of cryptos managed to buck the trend, however, with Algorand (ALGO) rallying by 25.1% to grab the headlines.
Algorand (ALGO) Sees Strong Staking Demand to Support a Breakout Week
According to Defi Llama, Algorand’s total value locked (TVL) increased by 19.4% to $187.36 million in the week.
Increased demand for ALGO as a staking crypto provided the upside in the week, with Algofi, a DeFi platform on the Algorand blockchain, seeing its dominance hit 61.22%. Users can lend ALGO on the Algofi protocol to earn ALGO.
ALGO is a popular staking crypto, as ALGO holders can stake as little as one ALGO to earn interest.
Early in the week, Algorand hit the news for an altogether different reason. On Monday, FIFA announced Algorand as an official partner ahead of this year’s FIFA World Cup in Qatar.