Business and Technology Reporter in Nairobi, Kenya
Nation Media Group
The value of popular cryptocurrencies has begun to rise again after the market crash that saw investors count billions of dollars in accrued losses.
After the crash that peaked in June, the total market capitalisation has now crossed $1 trillion again. It currently stands at $1.19 trillion, from the $890 billion recorded in June. It is still lower than the $2.8 trillion recorded in November last year, however.
Bitcoin, the largest of cryptocurrencies, has risen to over $24,000 from less than $20,000, and the price of Ethereum has risen to above $1,800 from about $940 in June, indicating that the market might be bouncing back from the June collapse.
According to experts in the field, the revamp is mainly because of the loosening of the tight financial conditions put in place to combat inflation by jurisdictions across the globe, which if reverted, could affect the market again.
“The tight financial environment resulting from the raising of interest rates in the United States and across the globe triggered widespread sell-offs causing the slump,” said Rufas Kamau, a Kenyan market researcher and analyst.
“The interest rates have not been raised again in the last two or three weeks, and inflation is beginning to slow down in many countries and that’s why investors feel confident in the crypto market again.”
Higher interest rates, according to Mr Kamau, cause people to reduce their expenditure and investments alike, which consequently affects the market capitalisation of both the equity and crypto markets.
But even as traders begin to shake off jitters caused by the tighter monetary conditions, experts say that the crypto market is still not entirely immune to shocks and the tokens traded remain as volatile as they have always been.
“There is still uncertainty in the global economic environment and it is unclear if countries will not raise their central bank policy rates again,” said Mr Kamau.
