Cryptocurrencies pull back after reaching $2tn market cap

Representation of cryptocurrencies are seen in this illustration photo taken in Krakow, Poland on June 29, 2021 (Photo Illustration by Jakub Porzycki/NurPhoto via Getty Images)
According to CoinMarketCap, the global market cap of cryptocurrencies currently stands at $2.02tn. Photo: Jakub Porzycki/NurPhoto via Getty

Cryptocurrency prices moved lower in early trade in London on Tuesday, pulling back after a day of gains that saw the global market cap surpass $2tn (£1.45tn) for the first time since May. 

Bitcoin (BTC-USD) headed 1% lower to around $46,700. Ethereum (ETH-USD), the second largest token, also declined 0.9%. 

Meanwhile, Dogecoin (DOGE-USD) which had rallied over the weekend, was almost flat at 10.45am. 

According to CoinMarketCap, the global market cap of cryptocurrencies currently stands at $2.02tn. 

Watch: What is bitcoin?

The retreat comes days after the cryptocurrency industry failed to win a change to tax reporting rules in the US's infrastructure bill. Legislation passed on Tuesday last week has outlined broad oversight of digital currency.

Some analysts said that the recognition from lawmakers of the crypto market was potentially a legitimising event and a recognition that it was here to stay, even if it served to pull the reins on it.

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The global market cap has nearly doubled from levels seen in mid-July, where at one point it sank to around $1.2tn.

Bitcoin has rallied in recent weeks after swooping to less than half of the all-time highs it met in April. The token was sitting at around $63,000 at its highest point. 

New data has suggested that institutional interest could still be supporting bitcoin's price.

"The digital coins are being used as a diversification strategy by large corporations," said Naeem Aslam, chief market analyst at AvaTrade. "Capital worth $17bn has already been invested in the sector as of 2021.

"The biggest asset manager in the world, having assets worth $9.5tn under its management, BlackRock has exposure to cryptocurrencies through its Global Allocation and Strategic Income Opportunities funds. 

"Similarly, CoinDCX has become a one of a kind crypto startup to achieve unicorn status in India. The startup has raised $90m in funding."

Watch: What are the risks of investing in cryptocurrencies?

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