News
Three reasons why the cryptocurrency market crashed on Tuesday
An analyst quoted by CryptoQuant theorized that a bottom is in play with the recent market crash.
The total cryptocurrency market has declined by more than 7% in the past week and by more than 3% in a month. In particular, Bitcoin (Bitcoin) fell below the $65,000 mark, while altcoins underwent massive corrections.
Altcoins, typically more volatile than Bitcoin, have fared worse than the leading virtual currency and have lost more than 4% of market value over the past 30 days. BTC has lost around 3% in the same time frame, but the token seems stuck in a sideways pattern.
Capitulation of the miners
A CryptoQuant The report notes that miners’ capitulation was a major reason for the decline in total market capitalization to $2.4 trillion. Following the Bitcoin halving, block rewards were reduced by 50% and miner revenues decreased by 55%.
The change in market dynamics has forced miners to fund business expenses by offloading more Bitcoin, contributing to further selling pressure on the token’s price and reinforcing its large price movement.
Low issuance of stablecoins
Stablecoins offer a path 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 trading.
The frequent issuance of stablecoins usually indicates an influx of capital and liquidity into the cryptocurrency market. However, analysts have noted low levels of stablecoin issuance. In other words, the new capital flowing into digital assets has somewhat stalled with prices.
Crypto ETF outflows
Locate Bitcoin ETFs companies like BlackRock and Fidelity have broken Wall Street records, reaching several billion in assets in just a few weeks. Recently, however, funds have experienced outflows, adding further pressure to Bitcoin prices and the broader digital asset market. More than 600 million dollars released digital asset investment products last week after an aggressive Federal Reserve policy meeting.
Even though the market has calmed down, analysts believe a turnaround is not impossible in the short term. “Historical trends suggest that periods of low miner-driven revenues combined with a high hash rate may indicate a potential market bottom,” a report states.