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Crypto market ‘gripped in bearish phase’ as Coinbase, Mastercard team up on NFTs

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Crypto market ‘gripped in bearish phase’ as Coinbase, Mastercard team up on NFTs
Almost 30% of bitcoin supply is now witnessing a loss. Photo: Artur Widak/NurPhoto via Getty

Major cryptos were down on Wednesday morning amid a bearish trend as two major players in the crypto space, Coinbase (COIN) and Mastercard (MA), partner up on non-fungible tokens (NFTs).

Bitcoin (BTC-USD) fell to $41,282 (£30,280) on Wednesday morning. At the time of writing it was up 0.6% to trade at $42,018. It has managed to stay above a key level of $40,000, but the world's largest cryptocurrency is still down about 30% from its all-time high of $69,000.

Ethereum (ETH-USD), the world’s second largest crypto by market cap, was down almost 2%.

“The cryptocurrency market seems to be gripped in a bearish phase,” Kunal Sawhney, CEO at Kalkine Group, told Yahoo Finance UK.

He said one reason for this is the fact that almost 30% of bitcoin supply is now witnessing a loss.

“Currently, it won’t be wrong to say that the fear sentiment has gripped the investors, and further decline cannot be ruled out with BTC’s price dropping to as low as $39,000 if the trend continues.”

He added that the market is not seeing enough buyers as holders are quite happy to play the waiting game and so there isn’t much activity happening at the moment.

Bitcoin's price movement on Wednesday morning. Chart: Yahoo Finance UK
Bitcoin's price movement on Wednesday morning. Chart: Yahoo Finance UK

Naeem Aslam, chief market analyst at Ava Trade, was more optimistic. He said that "in addition to successfully maintain its price above $40,000, options activity indicates that investors can expect cryptocurrency prices to rise from now on."

He said that according to recent data, demand for call options is rising while demand for put options is declining, and the spread between bearish and bullish expectations has shrunk to near zero from double digits.

"All of these are encouraging indicators for the cryptocurrency market."

But he said investors should keep in mind that the price action of bitcoin is still likely to remain volatile as a result of a hawkish US Federal Reserve, which is likely to raise interest rates soon — a negative for risky assets in general.

"Furthermore, the correlation between crypto markets and equity markets is growing, implying that a drop in equity markets could trigger a selloff in crypto markets as well."

Read more: Live crypto prices

Meanwhile, Coinbase and Mastercard are joining hands “to revolutionise the NFT purchase experience” in a move that will allow consumers of the crypto exchange to use credit and debit cards issued by MasterCard to carry out transactions in its upcoming NFT marketplace.

The marketplace hopes to make minting, purchasing, showcasing, and discovering NFTs easier. Coinbase said it plans "on working to find ways to bring this opportunity to the broader ecosystem through Mastercard’s scale and global network".

"MasterCard, one of the biggest players in digital payments, has been actively pursuing partnerships with companies operating within the crypto sector,” said Aslam.

“The alliance with MasterCard is likely to help Coinbase provide a more efficient and secure experience to its NFT customer base.”

He said the current process of purchasing NFTs is very cumbersome, which includes opening a digital wallet, purchasing digital currencies, and then using these digital currencies to procure NFTs.

"The platform to be provided by MasterCard is likely to provide more payment options to consumers wanting to purchase NFTs."

Watch: What is bitcoin?