Key Insights
- The crypto market is currently going through a period of uncertainty.
- This includes factors from the recent Bybit hack, fears of inflation with the US stock market crash, and the fears around a newly discovered virus.
- The US stock market lost nearly a trillion dollars on Friday last week, leading to concerns about possible inflation.
- Investor sentiment also took a massive hit from the $1.5 billion stolen from ByBit within the week.
- Despite these setbacks, the crypto market seems resilient and could be set for a comeback.
The crypto market is facing some serious headwinds this week.
Several factors have converged so far, creating a challenging environment for investors and other stakeholders.
Despite these factors affecting everything from macroeconomics to the crypto sector’s security, many analysts remain hopeful that a recovery is set to follow soon.
Here’s a closer look at some of these three factors affecting the current crypto market, according to Lucie, the Shiba Inu marketing lead.
1. Global Economic Uncertainty
The global economy is currently going through a series of uncertainties, and the effects continue to affect the crypto market.
These challenges, including drastic changes in US trade policies and inflation concerns, have been the major source of volatility.
Very recently, a $927 billion crash in the US stock market deeply bashed investor sentiment across several sectors.
According to Lucie, this loss caused widespread panic among investors. Many of these stakeholders are now uncertain about the future of the economy and are pulling funds from risky assets.
As a result, the crypto market has suffered, with Bitcoin failing yet another attempt to break above the $100,000 mark.
Bitcoin and Ethereum are also down by around 4.7% and 6%, respectively, over the last five days.
This shockwave from the US stock market continues to ripple across the entire market as investors become more and more reluctant to enter the market.
The ongoing trade policy from the Trump administration has also done little to allay fears.
In addition to these uncertainties, fears about an incoming inflation wave are also rippling through the market, with a recent survey from the University of Michigan showing that consumers are bracing for higher prices because of the incoming tariffs from the Trump administration.
2. The Bybit Hack
Hacks have always been a major risk factor in the crypto space. However, the recent hack at Bybit sent extra large ripples across the crypto space.
This hack resulted in the theft of a massive $1.46 billion in crypto from one of Bybit’s ETH cold wallets.
It is now being considered the largest crypto hack in history and is twice the size of the previous largest from the Ronin network.
According to ByBit, the attack happened via a manipulated transfer from its Ethereum multi-sig wallet.
The attackers directly attacked the smart contract logic and gained control over the wallets—which in turn allowed them to transfer the stolen funds.
Many investors grew even more fearful about the security of their funds, as Bybit assured users that all their funds are secure.
The hack is now being regarded as more than the $620 million stolen from the Ronin network in 2022, combined with the Poly Network’s $611 million a year before.
According to insights from independent on-chain sleuth ZachXBT, the hackers have already begun moving the funds around, with around 48 new addresses now being tracked.
The ByBit security team continues to work alongside other experts to recover the assets, despite the damage to market sentiment already being done.
3. A New Pandemic in Town?
Adding to the sense of unease is the discovery of a new virus in the United States.
Said virus has been raising concerns among public health experts and is affecting the world economy like the other two factors.
This virus is nicknamed “Camp Hill”, and reportedly belongs to the henipavirus family (which includes highly deadly viruses like Nipah and Hendra).
According to reports, researchers from the University of Queensland in Australia discovered the virus in shrews in Alabama.
While it has yet to infect humans, the genetic material in the virus indicates that it is capable of doing so.
One of the main reasons that this virus is causing a panic is because Henipaviruses are known for their high mortality rates.
Some like—like the Nipah virus—cause death in up to 70% of infected individuals.
The threat of a new pandemic has so far added another layer of fear to the global economic fears.
As we have seen with the Covid-19 pandemic, such events can crash entire markets, and the crypto sector is especially vulnerable.
While scientists continue to study what this virus means for the world, the mere possibility of another covid situation has been distressing for many investors.
Will the Crypto Market Recover?
Despite the challenges the crypto market is now facing, there has been some optimism so far.
For example, Bitcoin seems to be holding well above the $95,000 support and could bounce back as it did from previous downturns.
However, in the short term, the market continues to show signs of high volatility.
Investors should consider approaching with caution and keeping a close eye on developments within the crypto space.
While the outlook seems grim at this point, history has shown that the market’s sentiment can shift quickly, if given time.
