Virtual Asset Market Cap Plunges 3%... Is the Rally Over, or Just Taking a Breather?

▲ Bitcoin (BTC), Ethereum (ETH), XRP (XRP)/ChatGPT generated image ©

Although the virtual asset market, which recently surged by nearly 40%, dropped 3% in a single day, an analysis suggests that this decline is more akin to a 'breather' due to short-term profit-taking rather than the end of the upward trend.

According to investment media FXStreet on September 24 (local time), the total market capitalization of virtual assets decreased by 3% over the past 24 hours, reaching $2.86 trillion. The market has risen approximately 15% since mid-September and about 40% from its mid-August low. A strong US dollar, a sharp rise in bond yields, and a decline in stock prices triggered a sell-off across risk assets and profit-taking in virtual assets. The range that acted as a support level from November last year to February this year also turned into a resistance level, hindering the market cap's rapid return to the $3 trillion to $3.25 trillion sideways range.

Most major cryptocurrencies also showed weakness. Among the top 40 highly liquid cryptocurrencies, Tron (TRX) fell by 0.3%, Official Trump (TRUMP) and Uniswap (UNI) each dropped by up to 10.5%, while Litecoin (LTC) rose by 5.5%. Bitcoin (BTC) slipped below $84,000 on Wednesday, falling in tandem with other risk assets, and met resistance at a range that was previously a major support level. The Fibonacci 161.8% extension target of the upward movement that began in mid-August also failed to complete in one go.

However, FXStreet assessed this correction as a temporary halt in the rally, given that the current uptrend has not yet concluded. In 2021, Bitcoin also fell by over 50% from its peak before reaching new all-time highs again. Even if the current price drops to $70,000, it could be a significant shock to short-term investors, but the analysis suggests it would not undermine the long-term bullish outlook itself.

On the supply and demand front, both bullish signals and overheating risks emerged simultaneously. US Bitcoin spot ETF inflows surged to approximately $1 billion, marking the highest level since early October last year when BTC reached an all-time high of around $126,000. Ethereum (ETH) spot ETFs also recorded their largest capital inflows since October last year. According to Glassnode, actual buying increased not only in ETFs but also on cryptocurrency exchanges, while leveraged positions also rapidly expanded at the same time. Currently, about two-thirds of Bitcoin's supply is in profit, increasing the risk of profit-taking.

Santiment analyzed that as BTC approached $87,000, FOMO (Fear Of Missing Out on an uptrend) surged to its highest level since 2024. This suggests that if optimism becomes too one-sided, the likelihood of a short-term trend reversal could increase. Meanwhile, US Treasury Secretary Scott Bessent stated that dollar-pegged stablecoins are one of the means supporting the dollar's global role, with the dollar involved in 89.2% of global foreign exchange market transactions and most stablecoins also pegged to the dollar.

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