Why Is Crypto Down Today?

Why Is Crypto Down Today?

The cryptocurrency market experienced a downturn on June 10 as Robinhood announced the delisting of “unregistered securities” tokens from its platform. The market cap of the crypto market fell by 7% to below $1 trillion during a week marked by regulatory actions against major exchanges such as Binance and Coinbase by the U.S. Securities and Exchange Commission (SEC).

Bitcoin, the leading cryptocurrency in terms of market capitalization, saw a 3.75% drop to approximately $25,500. Ether, the second-largest cryptocurrency, experienced a decline of 6.9% to around $1,700, reaching its lowest level in two months.

Tokens identified as “unregistered securities” in the SEC lawsuits, namely Cardano, Solana, and Polygon, were among the worst performers on June 10, experiencing respective drops of 22%, 25%, and 30% on that day.

The market decline on June 10 coincided with Robinhood’s decision to delist SOL, ADA, and MATIC from its trading platform starting from June 27, citing uncertainties surrounding these assets amidst the SEC crackdown. Crypto.com also suspended its institutional investment services in the United States.

Reports of Binance selling off $4.4 billion worth of crypto assets in recent weeks might have added to the downward pressure on prices. Independent analyst Googly observed a significant drop in the exchange’s “proof-of-reserves.”

Binance’s founder, Changpeng Zhao (CZ), who is also named in the SEC lawsuit, refuted these claims.

Meanwhile, the sudden drop in Bitcoin price caught bullish options traders off guard, resulting in the liquidation of long positions worth over $340 million within just 24 hours, according to Coinglass data.

Notably, the decline in the crypto market coincided with an increase in the supply of Tether, the largest stablecoin by market capitalization. However, other top stablecoins, including USD Coin and Binance USD, experienced decreases in market capitalization.

Data suggests significant flows from cryptocurrencies to Tether addresses, with many of these addresses belonging to wealthy investors holding over 100,000 USDT. In June, the number of entities holding between $100,000 and $1 billion in USDT increased, while addresses with balances exceeding 1 billion USDT witnessed a decrease in supply, potentially indicating crypto exchanges.

Some analysts believe that the current downtrend is not unusual for Bitcoin and the overall cryptocurrency market. However, from a technical perspective, the crypto market cap has fallen below its key long-term support level, the 200-week exponential moving average (200-week EMA), indicating potential further downside in 2023.

If the market cap drops further below the 200-week EMA, the next target could be around $875 billion, representing a 25% decrease from current levels. On the other hand, bullish arguments point to an inverse head-and-shoulders (IH&S) pattern on the weekly chart, suggesting a price target of around $2.23 trillion for 2023-2024, more than double the current value.