The Crypto Market Plunge: Reasons behind the downturn and what\'s next

The crypto market has witnessed a significant downturn, with the global market cap tumbling from over $2.8 trillion to just below $2.5 trillion in a matter of weeks.

The crypto market has taken a hit recently, with the global market cap dropping from over $2.8 trillion to just below $2.5 trillion in a matter of weeks.

This stark decline has affected major cryptocurrencies like Bitcoin [BTC], which has seen a 7.9% drop in the past fortnight alone.

A closer look at Bitcoin reveals that it has not only dropped by nearly 8% over the last two weeks but has also continued to struggle in the last 24 hours, shedding an additional 0.1% to trade at around $65,524.

A CryptoQuant analyst has pointed to several factors that could be contributing to this recent downturn in the crypto market.

One key factor is miner capitulation, which becomes evident as Bitcoin flows out of miners’ wallets to exchanges.

This movement highlights the miners’ need to sell their BTC holdings to cover operational costs, putting selling pressure on the market.

Another factor highlighted by the analyst is the lack of new issuances of major stablecoins like USDT and USDC.

Usually, such issuances indicate fresh capital entering the market, which aids in maintaining liquidity and supporting price levels.

However, the stalling of stablecoin issuances has limited the availability of new funds to offset selling pressures, leading to increased volatility and price declines.

Finally, the analysis also points to the outflows observed in major cryptocurrency exchange-traded funds (ETFs) putting pressure on Bitcoin prices.

These outflows, like the 1,384 BTC withdrawn from Fidelity on June 17, are indicative of the selling behavior among crypto investors, especially in response to the uncertain macroeconomic landscape.

While the selling behavior is evident at the institutional level, an interesting observation comes from the Spent Output Profit Ratio (SOPR) for short-term holders, which has not reached the highs typically seen at market peaks.

This suggests that we are not quite at a cycle top yet, and the market is still being held up by long-term holders, who could be providing a strong support level to prevent a further crypto drop.

Despite the current downturn, there are indicators that the market might be nearing a bottom.

Another CryptoQuant analyst, known as Julio Monero, shared on the X (formerly Twitter) platform that Bitcoin has fallen below key short-term support levels, indicating a further drop to around $60,000.

This analysis comes as U.S. investors show less interest in the crypto market, large investors and traders exhibit subdued activity, and limited liquidity from stablecoins is affecting the market dynamics.

Further examination using IntoTheBlock’s data revealed a notable uptick in Bitcoin transactions exceeding $100,000, indicating increased activity from large-scale investors, which could foreshadow a shift in market momentum.

Prominent crypto analyst Ali analyzed Bitcoin’s historical price trends and suggested that if the current market cycle follows previous patterns, we might not see a peak until late 2024 or 2025.

This analysis was shared alongside a chart illustrating Bitcoin’s performance from its most recent cycle low.

Meanwhile, according to AMBCrypto’s recent report, despite all these downturns, we are still in a crypto bull market.

News source：https://www.kdj.com/cryptocurrencies-news/articles/crypto-market-plunge-reasons-downturn.html

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