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Why is the crypto market bearish today?
Who can really predict what might happen next in the crypto world?
A recent recession has once again made headlines. After a brief recovery period, the market took a hit, with global trading volume falling to $63.63 billion, its lowest point in weeks. This decline, marked by a sharp 17% drop in one day, was accompanied by a drop in the total value of the crypto market to $2.3 trillion, signaling a shift away from optimistic sentiments regarding the fear and greed index.
See why this is important.
BTC and ETH feel the heat
The recent downtrend has badly affected Bitcoin and Ethereum, with Bitcoin trading at $62,309.95 after a 2% drop and Ethereum at $2,999.41 after a 2.2% drop. This downward trend appears to continue, also impacting other cryptocurrencies.
On May 7, the total cryptocurrency market value remained stable at $2.35 trillion, with Bitcoin showing a slight increase to $63,550. However, other major cryptocurrencies like Ether, XRP, Dogecoin, Cardano, Toncoin (TON), and Avalanche have faced modest declines ranging from 0.5% to 2.5%. These declines are largely attributed to growing uncertainty in traditional markets.
Factors behind the decline
Here are several factors that have contributed to the current crypto market decline. The market has been stagnant for weeks, with little upward movement. However, today’s drop was triggered by new regulatory concerns in the crypto market. A decrease in ETF Bitcoin Futures and exchange inflows further dampened investor sentiment, leading to bearish conditions.
Regulatory obstacles
The resurgence of regulatory issues has raised concerns among investors. O Securities and Exchange Commission (SEC) issued a stern warning to Robinhood for allegedly violating securities laws. In response, Robinhood ceased support for certain cryptocurrencies considered securities by the SEC, echoing previous regulatory challenges.
ETF Expectations and Outflows
Amid high hopes for Bitcoin and Ethereum ETFs in Hong Kong, recent outflows from Bitcoin Futures ETFs have dampened market sentiment. These outflows, totaling a significant $284 million last month, have not only affected the price and popularity of Bitcoin but also added pressure to market dynamics.
Changing Exchange Dynamics
Bitcoin’s declining inflow rate across exchanges, now at its lowest level since 2015, signals a significant shift in the broader market trend. Long-term holders are refraining from selling their assets, opting instead to reaccumulate Bitcoin, indicating a potential transition into an accumulation phase.
What comes next?
There is a lot of speculation about the potential for Bitcoin to fall below the $50,000 mark before reaching new highs. Experts predict a next phase characterized by Bitcoin accumulation. You can expect opportunities and challenges for investors.