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Why is the cryptocurrency market down today?
After a brief period of recovery, the cryptocurrency market suffered another setback, characterized by a drop in overall trading volume to $63.63 billion, the lowest in weeks. This decline is highlighted by a 17% decrease in total one-day volume, along with a drop in overall cryptocurrency market capitalization to $2.3 trillion and a move away from bullish sentiments on the Fear and Greed Index.
Cryptocurrency Market prospects
The recent downtrend has severely affected Bitcoin and Ethereum, with Bitcoin trading at $62,309.95 after a 2% decline and Ethereum at $2,999.41 after a 2.2% decline. This downward trend appears to continue, impacting other cryptocurrencies as well.
On May 7, the total cryptocurrency market capitalization remained stable at $2.35 trillion, with Bitcoin rising slightly to $63,550. However, other major cryptocurrencies such as Ether, XRP, Dogecoin, Cardano, Toncoin (TON), and Avalanche saw modest declines ranging between 0.5% and 2.5%. These declines have largely been attributed to growing uncertainty in traditional markets.
Factors leading to the free fall of cryptocurrencies
Here are several factors that have contributed to today’s decline in the cryptocurrency market. The market has been stagnant for weeks, with little upward movement. However, today’s crash was triggered by new regulatory concerns in the cryptocurrency market. A decline in the Bitcoin Futures ETF and exchange inflows further dampened investor sentiment, leading to bearish conditions.
The SEC disrupts the cryptocurrency market
First, regulatory issues have returned, worrying investors. The SEC did well I notify to Robinhood for breaking securities laws. In response, Robinhood stopped supporting some cryptocurrencies that the SEC defines as securities. This is similar to Robinhood before, when other exchanges faced regulatory issues.
Lower outflows from Bitcoin futures ETFs
The market has big aspirations with Bitcoin and Ethereum ETFs in Hong Kong; However, outflows from Bitcoin Futures ETFs over the past four weeks have weakened the market. The outflows affected the price and popularity of Bitcoin, with $284 million in outflows affecting the market.
The cost of trading in Bitcoin has been low for ten years
Dropping to its lowest level in a decade, Bitcoin’s rate of inflow across exchanges has fallen to levels last seen in 2015, suggesting a change in the broader market trend. Long-term holders have stopped selling, opting instead to reaccumulate Bitcoin, potentially signaling a move towards an accumulation phase.
Analyst says BTC will nosedive
Some experts believe Bitcoin could drop below $50,000 before rising to new highs. They believe the market is entering a phase where people are accumulating Bitcoin, which could mean more ups and downs and opportunities for investors to make gains in the future.