Positive momentum evaporates as the crypto market has faced a downward trend, extending the decline for the eighth consecutive day.
The crypto market has been experiencing significant corrections over the past week. Bitcoin and Ethereum have lost approximately 12% of their value in the last 7 days, per data from CoinMarketCap.
The flagship crypto reached a new 2023 high – breaking the $31,000 mark on April 14. But now it has been facing sharp corrections, with losses of up to $1,000 in value almost every other day.
The decline’s reason remains unclear since no breaking news has surfaced. However, many speculate that some investors may have decided to take profits following the strong growth of the world’s largest cryptocurrency in the first quarter of 2023.
Another common explanation is the cautious approach to the upcoming month when the crypto market historically experiences “sell in May.”
Tokens Trade Lower
Ethereum has also stumbled along with the market as the price has taken a 12% dip in the past week.
Ethereum fell from a peak of $2,141 to $1,825 this weekend. This is the lowest mark since early April, wiping out gains achieved during the recent successful Shanghai upgrade that took place on April 13.
Other two major coins which were recently in the talks, Ripple (XRP) and Cardano (ADA), have followed the same pattern. Both reportedly dropped to a multi-week low – XRP declined by $0,4644 and ADA dropped by $0,3848.
The majority of the top 20 coins also joined the downward trend, with a 4-6% drop in the past 24 hours. The total value of derivative orders liquidated in the last 24 hours has reached $190 million, with long orders accounting for 89% of the liquidations.
The global crypto-asset market has seen a massive drop, with over $100 billion withdrawn. As the market remains uncertain, Bloomberg analyst Mike McGlone hints at a potentially significant drop, as Bitcoin and Ethereum may face resistance ahead.
Optimism in The Market
Despite the current challenges, Bloomberg analyst remains bullish on the long-term prospects of the largest cryptocurrency.
However, the tightening policies of the US Federal Reserve (Fed) and the resulting stock market decline leading to a potential recession may pose risks to all assets, including cryptocurrencies, in the near future.
Earlier this week, EU Parliament passed MiCA regulations. MiCA will be the first-ever comprehensive legal framework for regulating cryptocurrencies.
This landmark development brings much-needed clarity and regulation to the rapidly evolving world of cryptocurrencies, filling a crucial gap in the regulatory landscape.
After receiving widespread praise and support from the crypto community since its proposal in 2020, MiCA is now set to go into effect next year.
While industry leaders have acknowledged the merits of MiCA as a positive step towards crypto regulation, there have been concerns about certain aspects being too stringent.
Nonetheless, MiCA represents a bold and progressive move towards enhancing transparency, security, and accountability in the crypto market.
More Regulations Coming
The EU parliament’s resounding support for the groundbreaking rules regulating the digital asset market has sent shockwaves of optimism throughout the global crypto community.
This momentous development is expected to create a ripple effect of positive sentiment as it paves the way for a more secure and regulated crypto landscape in the European Union.
With increased oversight and accountability, investors and crypto enthusiasts can look forward to a more transparent and trustworthy digital asset market. In addition, they will have to give far more personal information.
The provisions of MiCA are expected to come into force approximately six months after being published in the official EU journal, which could be around June 2024.
While there are more regulations coming to crypto, the global nature of the market makes them much more difficult to regulate. Governments that are heavy-handed in regulating the markets may hurt their own economies.
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Author: Nicholas Say