As NFTs take a back seat, Bitcoin continues to trade in a narrow range, while meme coins bask in the spotlight amid divergent views on the macroeconomic outlook, according to Cointelegraph research. Let’s talk about crypto during market uncertainty.
Despite experiencing volatility in March, Bitcoin’s price remained steady in April. The rise of meme coins, including PEPE, garnered significant attention, while First Republic, a mid-sized U.S. bank, collapsed. Nevertheless, current market sentiment suggests a standoff between markets and policymakers. The U.S. Securities and Exchange Commission Chairman, Jerome Powell, has publicly stated that interest rates will remain steady this year, but the markets for risk-on assets like crypto have priced in a shift in the near future.
In these uncertain times, it is prudent to delve deeper into the underlying factors that will influence future market movements. With an unclear macro environment and potential regulatory crackdowns in the U.S., other noteworthy developments risk being drowned out by the dominant headlines.
The NFT collectibles sector has taken a significant blow this month – one of the few industries that has been negatively impacted. Meme coins, like PEPE, may have contributed to this decline by attracting attention and generating staggering profits. Additionally, BRC-20 tokens, a novel abstraction based on the Bitcoin Ordinals protocol, could compete for capital inflows from conventional NFT collectibles traders. Recently, the number of sellers has consistently exceeded the number of buyers on NFT marketplaces, and this pattern is expected to continue.
With all significant metrics, including volume and active wallets, showing a sharp decline, there are concerns that the NFT market may experience a free fall. NonFungible reported only 49,200 active wallets and sales volume of $80,500 this month. Other factors contributing to this long-term trend are the NFT marketplace wars and the decreasing interest in NFTs.
Despite the overall NFT market slump, the NFT lending market is a niche sector that is gaining momentum. Since the beginning of 2022, this area has seen double-digit growth each month, which continued in April with a 16.13% surge in new users.
Amid these developments, the trading day in East Asia began with Bitcoin down 2.6% at $27,715, and Ether down 1.4% to $1,850. The reason behind this decline is attributed to the congestion caused by the Ordinal-induced congestion in the Bitcoin network, leading Binance to suspend withdrawals twice over the weekend.
Hany Rashwan, the co-founder and CEO of 21Co, told CoinDesk that the current situation in Bitcoin is unprecedented and unlike anything seen in many years. While many blame BRC-20 meme coins, Rashwan suggests that meme coins should not be conflated with altcoins like Ethereum or Solana, which are smart contract platforms that offer a range of functions, including meme coins and NFTs.
To alleviate the congestion, Rashwan suggests that meme coin holders should take profits and move to altcoins and Ethereum, which may increase in value as a result. However, this move may require a large macroeconomic event to kick off.
Despite the current challenges faced by Bitcoin, Paul Eisma, the head of trading for XBTO Group, remains optimistic about crypto, attributing the technical problems to the Taproot upgrade, which boosted the network’s privacy among other improvements.
Eisma added that crypto is still in its formative years and subject to the same challenges that early-stage technologies face. He believes that this is all part of the growth and evolution of the network and that the largest cryptocurrency by market capitalization will eventually recover and be stable in the long run.
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