The cryptocurrency market has languished in a state of doom and gloom over the past month following the devastating events wrought by the TerraUSD depeg and Luna's crash. Given that Luna's reserves were filled most prominently with bitcoin, the two cryptocurrencies were inextricably linked amid the disarray, with Luna Foundation Guard selling off $2.4 billion of bitcoin to defend against the Terra depeg.
Now, however, bitcoin is experiencing a slight resurgence after being stuck primarily below the $30,000 mark for several weeks, reaching as high as 5.72% in early morning Monday trading. At the time of writing, Bitcoin's price sits at $31,610, which is a welcome sight for bulls but it proves the cryptocurrency and its many underlings still have a long way to go before fully realizing their previous momentum.
Bitcoin itself, despite the uptick, remains at a 34% slump since Jan. and is showcased on the market sentiment index, coined the Fear & Greed Index, to be at an "extreme fear" level of 13. Others, like American businessman Robert Kiyoaski, remain quite adamant on the possibilities of bitcoin and its future, citing in a recent tweet targeting bitcoin's slump that "Crashes are the best times to get rich."
On other fronts, Ethereum, too is seeing some positive gains, with a 5.61% uptick as of writing, sitting at $1,905 per token. Similar smaller tokens, such as Cardano, Solana, and even Avalanche, are witnessing price jumps, as well, up by 11% on Monday. Ether was trading earlier this year at around $3,800 and has been hit largely by both the massive crypto space sell-off in addition to the entire DeFi market itself, witnessing its own $40 billion loss as investors withdrew cash from Ethereum-based applications.
According to DeFi Llama, the current standing of the DeFi market in total value locked sits at $71 billion, a dramatic fall from its heights of $160 billion seen in Nov. of last year. On the whole, the cryptocurrency market itself has experienced a rather positive 5.36% jump over the past day to a total market cap of $1.29 trillion, according to CoinMarketCap.
While the numbers seem good on the outside, their future largely remains uncertain in the face of forthcoming Consumer Price Index (CPI) data on the month of May set to release on June 10th. These releases typically directly influence the market, especially digital currencies, as US inflation hits dramatic levels, at the highest it has been since the 1980s. In addition to the CPI benchmarks, similar concerns rest on the potential of interest rate hikes via the Federal Reserve, scrutiny of which will be tantamount to woes circumventing a potential recession.
The cryptocurrency market will have to hope for a downward spiral in inflation. If the inflation numbers are, in fact, on a dwindling projection, the Fed could ease rates on market conditions, but if not, things could only get worse for both the digital asset world and the traditional stock market.
Now, more than ever, bitcoin is being traded like wildfire, as expressed via analytics from CryptoQuant, which points out that investors are pushing bitcoin onto exchanges. Levels of exchange reserves are decreasing dramatically, at points not seen since Oct. 2018, added to the fact that Santiment, a market sentiment monitoring firm, showcases that addressed with 1,000 bitcoin or more now wield the most supply of the crypto than at any point within the past year.
