The fundamentals of cryptocurrency are more solid than ever

<p>The recent sell-off was largely driven by concerns about the Federal Reserve of the United States' quantitative tightening and projections of higher interest rates, but crypto fundamentals are stronger than ever.</p> <p>2022 crypto markets did not get off to a good start, with asset prices falling sharply since the new year, a trend that began in November last year. Bitcoin (BTC) and ether (ETH), the two most valuable cryptocurrencies by market capitalisation, have fallen 45 and 48.2 percent, respectively, since their all-time highs. The overall market lost $757 billion in market capitalisation over the last 30 days.</p> <p>In a new report from American crypto asset managers Bitwise, authored by Chief Investment Officer Matt Hougan and Director of Research David Lawant, the authors blame the downturn on market sentiment. "Weak sentiment is driving the market lower, even as fundamentals remain strong," the report says. The Bitwise 10 Index has fallen more than 20% in the last week.</p> <p>"The market is likely to continue experiencing short-term volatility as it works through macro challenges," the report reads. "However, our experience with previous crypto pullbacks (along with the space's strong fundamentals) leaves us optimistic about the long-term outlook."</p> <p>There has been a significant shift in the sentiment of the financial markets.</p> <p>Over the last three months, the most significant driver of the crypto market's decline has been a broad shift in capital market sentiment away from risk-on assets, such as tech stocks and crypto, and towards risk-off assets, such as sovereign bonds. "This movement is being fuelled by an emerging consensus that the Federal Reserve will soon begin tightening monetary policy in order to combat inflation."</p> <p>The Nasdaq Composite Index is down more than 10% from its peak in November 2021, and many technology stocks are down 20% or more as a result of this shift in sentiment.</p> <p>"The recent sell-off is reminiscent of the market's discomfort with a more h