Major sell-off sees total crypto market cap dip to $900B

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The total cryp­to mar­ket cap is down 15% over the past sev­en days, drop­ping from $1.069 tril­lion to $903 bil­lion at writing.

Most of the loss­es came on Sun­day, Sep­tem­ber 18, with a steady uptick in out­flows begin­ning in the morn­ing (UTC). This pat­tern con­tin­ued into Mon­day morn­ing, with the ear­ly hours see­ing sig­nif­i­cant dips on the path down.

A local bot­tom was reached at 08:00 (UTC) after hit­ting $900.9 bil­lion, mark­ing a nine-week low. Since bot­tom­ing, approx­i­mate­ly $3 bil­lion of cap­i­tal inflows re-entered the market.

Total crypto market cap

What next for crypto now the Merge is done?

On the cryp­to front, the most sig­nif­i­cant event to occur over the past week was the Ethereum Merge.

After months of hype, the Merge was com­plet­ed on Sep­tem­ber 15 at approx­i­mate­ly 07:00 UTC. The event was polar­iz­ing, with some advo­cates claim­ing it would lift the rest of the mar­ket high­er. But as Input Out­put CEO Charles Hoskin­son point­ed out, the Merge has not improved Ethereum’s “per­for­mance, oper­at­ing cost, nor liquidity.”

Numer­ous oth­er crit­i­cisms have come to light post-Merge, includ­ing claims that Ethereum is now con­sid­ered a secu­ri­ty, and per­haps most con­cern­ing, the cen­tral­iza­tion of the net­work as it emerged just two nodes con­trol 46% of transactions.

Since then, Ethereum has lost 21% of its val­ue, drop­ping from a price of $1,640 and exem­pli­fy­ing a clas­sic buy the rumor, sell the news event.

YouTu­ber Lark Davies recent­ly com­ment­ed that there are no sim­i­lar­ly hyped events to prop up the cryp­to mar­ket going into the rest of this year.

The macro

Like­wise, there have been no sig­nif­i­cant devel­op­ments on the macro front. The squeeze on house­hold incomes from spik­ing infla­tion and the sub­se­quent pres­sure to raise inter­est rates remain the dom­i­nant narrative.

The Fed­er­al Open Mar­ket Com­mit­tee (FOMC) is sched­uled to meet on Tues­day, with many expect­ing a 75 basis point hike.

How­ev­er, giv­en the recent release of CPI data which showed a 0.1% increase in infla­tion for August against a red-hot labor mar­ket, it’s clear that infla­tion­ary pres­sures are not under control.

Chief Invest­ment Strate­gist at Yardeni Research, Ed Yardeni, recent­ly com­ment­ed that the Fed should “get it over with” and imple­ment a 100 basis point hike.

The upcom­ing FOMC will be a key point for mar­kets. The cryp­to sell-off is like­ly down to mar­ket par­tic­i­pants pric­ing in the loom­ing rate hike.

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