The total cryptocurrency market capitalization has dropped to an eight‑month low of about $2.93 trillion on Thursday, according to CoinGecko data. This level wipes out much of the gains recorded since April and represents a decline of roughly 33% from the $4.4 trillion peak reached in early October 2024. The pullback has come amid heightened macroeconomic uncertainty, with global investors reassessing risk assets and analysts warning of more short-term pain ahead.
Analysts warn of possible deeper correction
Market observers have pointed to several broad economic factors contributing to the sell‑off. The crypto market has faced steady pressure since March, fluctuating between $2.5 trillion and record highs. Analysts link the renewed downturn to the latest Bank of Japan rate hike, which raised its benchmark rate to 0.75%, the highest in three decades.
Michaël van de Poppe, co‑founder of MN Fund, said on Friday that more pain could be ahead.
“Wouldn’t be surprised if BTC continues to cascade and gets itself into a form of capitulation in the next 24 hours, as the trend clearly is down,” he stated. “That would mean -10/20% move on altcoins, which then should be bouncing quite quickly.”
Bitcoin briefly rose 2.3% to $87,951 after the Bank of Japan announcement but soon cooled. Analysts regard Bitcoin’s stability as central to the entire sector’s direction. Van de Poppe noted that Bitcoin’s performance often determines sentiment and liquidity across digital asset markets, and further downside pressure on BTC could easily push alternative cryptocurrencies lower.
Broader correction reflects global risk aversion
Nick Ruck, director of LVRG Research, said the market’s recent weakness reflects a “broader correction driven by macroeconomic pressures and reduced risk appetite among investors.” He explained that despite short-term volatility, there are opportunities for investors patient enough to take a longer view.
“While short-term volatility persists, this pullback presents potential accumulation opportunities in fundamentally strong projects as the sector continues to mature and attract institutional capital,” Ruck said.
His assessment suggests that strategic investors could see the current decline as part of a natural market cycle rather than the beginning of a lasting downturn.
The market had been hovering within a defined range for most of 2024. It bottomed near $2.5 trillion in April before climbing back to all-time highs six months later. Analysts interpret the movement as a consolidation phase interrupted by macroeconomic shocks and risk-off sentiment driven by central bank actions.
Market sentiment drops into extreme fear
Data from blockchain analytics firm Santiment shows that social sentiment has reached levels categorized as “extreme fear.” The Fear & Greed Index fell to 16 on Friday and has remained below 30 since early November. Santiment reported,
“Commentary is mainly showing fear after Bitcoin bounced to $90.2K yesterday, and then quickly retraced to $84.8K.”
Historically, extreme fear has often preceded market rebounds when overextended selling drives prices below fair value. Santiment noted that “prices move opposite to the crowd’s expectations, so this volatility, being marked by fear, is a good signal for those who are patient enough to ride this out.”
Traders on social media continue to debate whether the current condition marks the early stages of a deeper bear market or an investment window before a recovery. Many retail traders remain cautious, while some institutional investors reportedly view the correction as a potential entry point for long-term accumulation.
A market searching for stability
The crypto market’s current decline illustrates a wider effort by investors to find equilibrium amid global financial tightening. Liquidity constraints, risk aversion, and uncertainty surrounding future rate policies have all contributed to a difficult trading environment.
Although analysts remain cautious about short-term direction, several indicators hint that the market may be approaching a level of capitulation, where exhaustion among sellers sets the foundation for eventual stabilization. For now, the market remains in a state of high tension, with participants watching Bitcoin’s next move to determine whether digital assets can hold near current levels or slip further before recovery begins.
Gunel Ismayilova
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