- The crypto market dropped in June, wiping out May's gains and pushing altcoin market cap below $1 trillion
- Bitcoin's influence persists as institutional exits and miner sell-offs heighten bearish sentiment, threatening critical support levels.
- July's market direction hinges on potential ETH ETF launches and key economic data.
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The crypto market has been consolidating for several weeks, with altcoins taking the brunt of the damage. This downward trend began in June, wiping out gains made during a brief recovery in May. Weakening risk appetite due to macroeconomic concerns has led investors to retreat, pushing the market back to levels seen during the April decline.
Following the SEC's first confirmation in May, Ethereum surged from $3,100 to a range of $3,600-$3,800, marking a rapid 20% increase. However, Ethereum has since slipped below the $3,400 support level, reflecting the broader market trend.
Meanwhile, Bitcoin, the leading cryptocurrency, has been a major source of pressure on the entire market since June began. Additionally, the pace of institutional investor exits has accelerated. However, recent reports suggest that miners may be the biggest source of downward pressure. Facing declining revenue after the Bitcoin reward halving, miners have been forced to sell their holdings to cover fixed costs.
Further fueling the panic in this already volatile market were statements from Mt. Gox and news of the German government selling its Bitcoin. Today, rumors of potential BTC transfers by the US government are adding to the bearish sentiment, keeping the crypto market glued to critical support zones.
Crypto Market Faces Turbulence as Market Cap Drops 10% in June
The cryptocurrency market experienced significant turbulence in June, erasing the gains made in May with a 10% decline. Total market capitalization has now fallen to the 2024 support zone, forming a double-top pattern around the $2 trillion mark. This critical support zone lies between $2 trillion and $2.1 trillion.
Weekly closures below this range could lead to a further decline of 15%-20%, making it crucial for the market capitalization to stay above $2 trillion to avoid a deeper technical downturn. Such a decline could see Bitcoin's value drop to an average range of $48,000-$51,000.
Despite these challenges, the cryptocurrency market is known for its rapid shifts. Notably, speculation is growing that spot Ethereum ETFs may soon be available for trading. Following the SEC's first confirmation in May, Ethereum surged from $3,100 to a range of $3,600-$3,800, marking a rapid 20% increase. However, Ethereum has since slipped below the $3,400 support level, reflecting the broader market trend.
Ethereum: Can ETF Spark New Bullish Phase?
ETH ETFs are poised to commence trading in early July, potentially triggering a surge in Ethereum demand and catalyzing the altcoin market. However, experts remain cautious, doubting Ethereum's ability to attract funds as effectively as Bitcoin.
Nevertheless, the anticipated ETF launch could propel the cryptocurrency above $3,400. A positive ETF impact may signal a reversal, with ETH aiming for weekly closes surpassing $3,500. Such momentum could sustain a push towards $4,000 by year-end, contingent upon macroeconomic factors.
The broader crypto market's trajectory hinges significantly on the Federal Reserve's interest rate policy. Should the Fed signal two rate cuts in line with market expectations, cryptocurrencies could benefit from reduced dollar yields and lower market costs. Friday's impending PCE data, crucial for gauging inflation, assumes pivotal importance.
A favorable PCE reading, meeting or below expectations, might signal stable inflation, prompting a more tempered Fed approach to rates. Additionally, tomorrow's US GDP and unemployment claims data will offer further insights into economic trends. As July dawns, cryptocurrencies face critical support levels post-June losses. Near-term market volatility is likely to amplify with impending data releases and Fed decisions shaping investor sentiment.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.