In the first quarter of 2023, the cryptocurrency market had one of its worst quarters on record. Total market capitalization sank by 18.6%. The entire market plummeted, with over $633.5 billion lost throughout this recent bearish turn. That marked the end of an equivalent climb that peaked January 18, just days before Donald Trump’s inauguration as US President. CoinGecko’s latest crypto market report, which documents all of these advancements, illustrates that the volatility of the crypto market has been exposed by changes in economic factors.
On January 18, the total crypto market capitalization peaked at well over $850 billion. It has had a long and tumultuous road since that high point. This marked decline is indicative of larger trends seen in financial markets as risk sentiment has turned. The US Dollar, on the other hand, has receded from its earlier highs. At the same time, recessionary currencies GBP/USD are beginning to rattle up. On the chart, GBP/USD is back to test the 1.3250 area again. This level represents daily highs and indicates the possible return of currencies’ fortunes.
CoinGecko’s report draws attention to the fact that a large majority of retail investors are exposed to high risks when trading in the cryptocurrency market. It prominently displays the warning that 81.4% of retail investor accounts lose money trading contracts for difference (CFDs) with this provider. Such figures highlight the volatility and risks that come naturally with an investment in cryptocurrencies alone.
The overall cryptocurrency market cap has taken a significant hit. This decline represents a significant withdrawal in investor confidence and capital migration within the space. Analysts are quick to highlight the number of causes fueling this recession. Major concerns are macroeconomic headwinds, increased regulatory oversight, and shifting investor appetites. Consequently, both traders and investors are reassessing their risk exposure as the industry landscape continues to shift.
It’s no secret that cryptocurrency values have crashed. At the same time, risk environment on a whole continues to be strong, weighing on vulnerable currency pairs such as GBP/USD. It’s possible that cryptocurrencies just recently hit their peak. Despite these pressures, other asset classes are still exhibiting notable strength. The surging GBP/USD indicates a bullish upside catalyst, at least during these erratic market conditions.
Please note that the authors are writing here purely in their individual capacity with their own thoughts and opinions. These views are not the official stance of FXStreet or any of its employees. The author and FXStreet are not registered investment advisors. This article should not be construed as providing any investment advice. Readers should do their own research and use their own financial judgments before making any investment with real money.