Markets
Three reasons why the cryptocurrency market fell on Tuesday
An analyst cited by CryptoQuant speculated that a bottom was at play in the recent market crisis.
The total cryptocurrency market has declined by more than 7% over the past week and by more than 3% in a month. In particular, Bitcoin (BTC) fell below $65,000 while altcoins suffered massive corrections.
Altcoins, generally more volatile than Bitcoin, have performed worse than the leading virtual currency and lost more than 4% of their market value over the past 30 days. BTC has lost around 3% over the same period, but the token appears stuck in a sideways trend.
Surrender of miners
A CryptoQuant The report notes that the capitulation of miners was one of the main reasons for the drop in total market capitalization to $2.4 trillion. Following the Bitcoin halving, block rewards were reduced by 50% and miner revenues fell by 55% in parallel.
The change in market dynamics has forced minors to fund the company’s expenses by offloading more Bitcoin, thereby contributing to additional selling pressure on the token’s price and strengthening its price action.
Low issuance of stablecoins
Stablecoins providing a pathway to digital assets by increasing and decreasing liquidity for the decentralized ecosystem. Tokens like those of Tether USDT and Circle’s USD coin (USDC) are pegged to the US dollar, providing a non-volatile currency for trade.
The frequent issuance of stablecoins generally indicates an influx of capital and liquidity into the cryptocurrency market. However, analysts have noted low levels of stablecoin issuance. In other words, new capital flowing into digital assets has stagnated somewhat along with prices.
Crypto ETF exits
Spotting Bitcoin AND F companies like BlackRock and Fidelity broke Wall Street records by reaching billions in assets in a matter of weeks. Recently, however, funds have experienced capital outflows, which have added further pressure to Bitcoin prices and the broader digital asset market. More than 600 million dollars got out digital asset investment products last week after a hawkish Federal Reserve policy meeting.
Even though the market has calmed down, analysts believe that a reversal is not excluded in the short term. “Historical trends suggest that periods of sustained low miner revenue combined with a high hash rate may indicate a potential market bottom,” a report states.