The cryptocurrency market experienced a significant drop on July4,with total market capitalization falling by over5.7%.Factors contributing to this downturn includeU.S.economicuncertainty,Bitcoin ETFoutflows,and a weakening marketstructure.
Points
- Cryptomarketcapitalizationdroppedbyover5.7%toabout$2.114trillion.
- U.S.economicuncertaintyandFed’sinterestratepoliciesweighoncryptoprices.
- BitcoinETFoutflowsandlongliquidationscontributetomarketdecline.
U.S.EconomicUncertaintyHurtstheCryptoMarket
Investor uncertainty surroundingU.S.inflation and interest rates also weighs on cryptoprices.Today’scrypto market decline is part of a correction that started on July1following recent remarks by Federal Reserve chair Jerome Powell that reduced possible rate cuts in2024.
Powell explained that theU.S.Federal Reserve needed more convincing data that conditions were right to lower interest rates—a key move being watched by cryptoinvestors.
Fed targetrateprobabilitiesforSept.18FOMCmeeting.Source:CMEGroup
https://x.com/KobeissiLetter/status/1808148466075394143
“Whilemarkets are expecting two rate cuts thisyear,theFed’slatest guidance says one cut iscoming.”
BitcoinETFOutflowsContinue
Notably,theU.S.-basedspot Bitcoin ETFs witnessed net outflows of$37.3million during the week ending June28.The outflow trend continued thisweek,with the investment vehicles witnessing$13.7million and$20.5million worth of withdrawals on July2and July3,bringing the net ETF reserves to$14.62billion,as per Farside Investorsdata.
The outflows coincide with accelerated long liquidations across derivativesmarkets,overpowering the short ones in the last24hours.
Data from Coinglass reveals that longtraders—thosebetting on the cryptomarket’supside—havewitnessed a total of$339.59million worth of liquidations in the last24hours.Incomparison,short traders suffered over$69.35million in liquidations in the sameperiod.
Total cryptoliquidations.Source:Coinglass
When long positions areliquidated,traders who are betting on prices going up are forced to sell theirpositions,often at aloss.This increased selling pressure has driven the crypto market valuation lowertoday.
AWeakeningMarketStructurePointstoaDeeperSell-Off
From a technicalstandpoint,today’scrypto market declines are part of a correction inside its prevailing descending parallel channelpattern.Forinstance,the
total market capitalization has dropped19%since turning down from$2.6trillion on June7.
The sharp correction on July4has seen the TOTAL crypto market capitalization lose crucial supportlevels,including the200-dayexponential moving average（EMA）and the lower trendline of the decliningchannel,which are at$2.114trillion and$2.1trillion,respectively.
Lookingforward,the position of the relative strength index at30asserted thebears’dominance in themarket.If thesell-sideactivitycontinues,the crypto market valuation may drop further toward the$2.0trillion market over the next fewdays.
Conversely,a break above the middle trendline will likely push the crypto market cap toward the uppertrendline,which is around$2.244trillion.
WrappingUp
The cryptocurrency market has faced significant downturnsrecently,driven byU.S.economicuncertainties,Bitcoin ETFoutflows,and a weakening marketstructure.Investors should remain cautious and monitor key technical levels and economic indicators to navigate this volatileperiod.
This article does not contain investment advice orrecommendations.Every investment and trading move involvesrisk,and readers should conduct their own research when making adecision.