Why the 60% drop in Bitcoin and crypto market cap from all-time highs?
Macro Markets is a show hosted by crypto analyst Marcel Pechman, which airs every Friday on the Cointelegraph Markets & Research YouTube channel. The show explains complex financial concepts in simple terms, focusing on how traditional financial events affect the day-to-day activity of the crypto market.
The latest episode of Macro Markets explores why the crypto market capitalization is 60% below its all-time high, while the S&P 500 is less than 15% away from its peak. Pechman believes that the crypto sector doesn’t fit into a commodity or foreign exchange currency category, and not every mutual fund can hold crypto. Therefore, if Bitcoin and Ether are seen as alternative risk assets, that’s how they will trade. The show advises against wasting time searching for theories to explain why crypto has been unable to break new highs.
The show also discusses NVidia’s $2.3-billion short seller losses, which may not provide the real picture since a short seller can endure pain if they don’t close the borrowing. This is similar to a buyer who paid a much higher price for their crypto until they make the sale. The difference is that the short seller needs to find someone willing to lend those shares to keep the trade open.
The show debates China’s 5% growth, which has disappointed investors, and its consequences for the markets. Pechman believes that China’s reluctance to issue new stimulus packages could be a strategy to weaken the remaining global economies. This could negatively affect crypto in the short term as it drains liquidity from markets, and investors may reach for short-term government bonds and cash. However, if the US dollar loses strength, that could be positive for crypto in the medium term.
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