Only ‘real’ cryptocurrencies will endure the current market turmoil, according to Cardano founder Charles Hoskinson.
In an X post on 5 August, Hoskinson warned that an economic downturn in Japan could trigger a cascade of negative effects across broader markets, including the cryptocurrency sector. He stressed that while short-term market volatility is inevitable, the long-term outlook for cryptocurrencies remains positive, especially for those with “integrity and utility”.
Japan blowing up could cascade into the greater markets, including crypto on the short term. Moonboys will flood X and bark like babbling idiots about how project founders have failed and are evil; regardless, the macroeconomic caravan goes on.
Markets are not above the reality… https://t.co/3sPVKIey3Y
— Charles Hoskinson (@IOHK_Charles) August 5, 2024
Hoskinson’s statement reflects a growing sentiment within the crypto community that the industry is maturing beyond speculative frenzy. He further elaborates that the current market conditions will likely separate the wheat from the chaff, with only those cryptocurrencies offering tangible value and real-world applications able to withstand the storm.
Despite the challenging market environment at the moment, Hoskinson remains optimistic about the long-term prospects for cryptocurrencies, arguing that they represent a fundamental shift away from traditional fiat systems.
Global markets sell-off
The Cardano founder’s comments come as stock markets around the world suffered huge falls on Monday – starting with Japan’s Nikkei, which plunged 12%, the biggest one-day drop since the Black Monday crash of 1987.
The rout began in Asian markets on Monday and spread to European and United States (U.S.) markets later in the day. South Korea and Taiwan also witnessed significant stock market declines exceeding 8%. U.S. markets opened with major losses, with the Dow Jones falling over 1,000 points and the NASDAQ dropping 6%. The S&P 500, meanwhile, decreased 4.2%. European markets also slumped to a 6-month low.
The crypto market is struggling with increased volatility and falling prices as well. Bitcoin (BTC), the world’s largest cryptocurrency, fell 15.72% in 24 hours from around $60,896 on August 4 to $51,325 on August 5, before recovering slightly to $55,114 at the time of writing. Other crypto assets like Ether (ETH), Solana (SOL), Cardano (ADA) followed suit, experiencing substantial price drops.
Crypto market plunges into ‘Extreme Fear’
The cryptocurrency market is gripped by fear as the Crypto Fear & Greed Index plummeted into ‘Extreme Fear’ territory. The index, a widely watched barometer of market mood, dropped to a dismal score of 17 out of 100 – the lowest since July 12, 2022 – underscoring the prevailing bearish sentiment among investors.
The U.S. spot Bitcoin exchange traded funds (ETFs) also saw significant outflows of $168.4 million on August 5. Most came from the Grayscale Bitcoin Trust and the ARK 21Shares Bitcoin ETF, at $69.1 million and $69 million, respectively. At the same time, despite market difficulties, spot Ether ETFs saw a net inflow of $48.73 million on Monday.
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