Crypto market cap dropped below $1 trillion

With today’s drop, the overall crypto market cap has fallen below $1 trillion. 

Taking data from CoinGecko, which monitors as many as 12,902 cryptocurrencies, tokens, and stablecoins, yesterday the crypto market capitalization was about $1,050 billion, while today it fell below $990 billion. 

Summary

• Crypto market cap and Bitcoin’s dominance
• The history of the crypto market’s last bull run
• Bitcoin and the performance of LN

Crypto market cap and Bitcoin’s dominance

It is worth noting that the dominance of Bitcoin also dropped, which with its approximately $360 billion market capitalization has an overall share of just over 36%. 

At the end of August it was at 38%, while at the end of June it was up to 45%. 

The fact is that Ethereum’s dominance is rising, probably in anticipation of the Merge in mid-September. While it was down to 14% in June, it is now up to 19%, which clearly indicates that there has been some shift in focus from Bitcoin to Ethereum in recent months. 

In particular, the ratio of Bitcoin’s market capitalization to Ethereum’s has dropped below 2, as ETH now capitalizes more than half of BTC ($182 billion). 

Thus, two simultaneous phenomena are taking place. On the one hand, the descent of the overall crypto market capitalization due to a new price drop, and on the other hand, a more pronounced descent for Bitcoin than for Ethereum, given that the price of ETH is currently benefiting from the imminent arrival of the Merge. 

After the Merge, the situation could return similar to that of June, at least in terms of dominance. 

In April, before the May collapse due to the Terra/Luna ecosystem explosion, the crypto market capitalized more than $2.2 trillion, more than double the current level. After the May crash it had dropped to $1.2 trillion, and after the June crash it was as low as $900 billion. 

Thus, the current level is not the lowest in 2022 and it is not even lower than last year’s lows. 

In the last 24 hours, the crypto market has started a new bearish phase

The history of the crypto market’s last bull run

By January 2021, Bitcoin’s bull run had already begun, but that of altcoins had not. This meant that by early 2021 the total capitalization of the crypto market was as low as $800 billion, a level below the 2022 low touched in June. 

At that time Bitcoin’s dominance was 68%, confirming that the bull run of altcoins had not yet begun. 

About today’s price drop, which brought Bitcoin below $19,000, eToro crypto market analyst Simon Peters commented by saying: 

“The cryptocurrency market remained essentially stagnant last week due to continued uncertainty over the Fed’s planned interest rate hikes. Bitcoin is currently trading below $19,000 as it continues its increasingly close correlation with equities. Ether has fared somewhat better, and is now trading at about $1,500, about the same as last week. This probably reflects bullish interest in the upcoming Merge, which will take place on 15 September.

While the Fed’s hawkish approach undoubtedly affects sentiment, we have entered September, statistically one of the most difficult months for investors. Historically, September has been the worst month for equities, with the S&P 500 falling by an average of more than 1% since 1928, as investors return from summer vacation and deal with the surge of back-to-school spending and begin to pick up fiscal losses before the end of the year. Any weakness would likely be magnified by cryptocurrencies, given their higher correlation with equities, which has become institutionalized in recent years, and their traditionally higher risk profile as a newer asset class.”

Bitcoin and the performance of LN

Meanwhile, the overall capacity of Bitcoin’s Layer 2, Lightning Network, has hit a new all-time high at 4,692 BTC, so much so that even former MicroStrategy CEO Michael Saylor said they are working on new LN solutions aimed at bringing this technology to millions. 

So, as is often the case during a bear market, Bitcoin’s fundamentals continue to grow, despite everything, but the price fails to be positively affected. 

An interesting point: yesterday there was an incredible anomalous spike in transactions recorded on the Bitcoin SV blockchain: more than 25 million in a single day. It is enough to think that on the same day the Bitcoin blockchain recorded only 267,000, and the Ethereum blockchain just over 1 million. 

It is unclear what happened because this is a glaring anomaly, not least because the average transaction value was high anyway. This is not the first time similar anomalies have happened on the Bitcoin SV blockchain. 

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