Crypto Market Faces Downturn Amid Price Correction, Decreased Trading, and Regulatory Pressures
Summary:
The crypto market experienced a sharp decrease in prices, largely due to a weekend correction in Bitcoin and Ether, and leading to a wave of long liquidations in the derivative markets. Daily trading volume has also been on a steady decline in recent days. Regulatory pressure continues to impact market sentiment, and the crypto market is navigating challenges from various economic and regulatory factors.
Major cryptocurrencies, including Bitcoin (BTC) and Ether (ETH), experienced a sharp decrease in prices after a weekend correction in the crypto market. On December 10, Bitcoin saw a 6.5% dip in value, erasing almost a week's worth of gains in a span of 20 minutes. As the week unfolds, the crypto market continues on a downward trend as market players take time to understand the causes behind the unexpected correction.
The drop in value of key cryptocurrencies triggered a wave of long liquidations in the derivative market. Optimistic investors were taken by surprise, leading to a rush in liquidations. In the last day alone, more than $350.3 million worth of long positions were liquidated in the crypto market, including $44.3 million in the last 12 hours. This surge in liquidations negatively impacts crypto prices, given the absence of sufficient trading volume to offset it.
Following a high of $37.6 billion on December 4, the total daily trading volume has been consistently decreasing. On December 10, the daily trading volume for the crypto market was just $19 billion. Market analysts have voiced their concerns over Bitcoin's dominance in light of the falling trading volume. A decline in Bitcoin dominance usually heralds a potentially fruitful window for altcoins, but this has yet been realized.
The tussles between regulators and the crypto industry are also impacting market sentiment. Some key developments include the US Department of Justice announcing on November 21 outcomes related to enforcement actions and a settlement agreement with CZ and Binance, both pleading guilty. The newly imposed compliance requirements for Binance includes making all records and resources available to US authorities upon request.
Market sentiments play a vital role in the performance of risk assets, including Bitcoin and other altcoins. The possibility of adversarial crypto regulations, including potential bans, continues to create uncertainty in the market. At the moment, traders appear to be cashing in on profits following a sustained rally that led to annual highs. Although the crypto market faces diverse challenges in the immediate future, it's performance will be governed by various economic and regulatory considerations going forward.
Please note, this article does not provide investment advice or recommendations. All investments and trading activities carry inherent risks, requiring readers to conduct due diligence before making any decisions.
Published At
12/11/2023 8:43:52 PM
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