TL;DR Breakdown
- Crypto trading volumes have hit Q2 yearly lows amid the SEC industry crackdown, and investors fear the return of another bear market.
- Bitcoin lost the most market share of trading volume in the second quarter of 2023.
- Tether’s USDT depegs to $0.9958, its largest one-day decline since November 2022.
- Ethereum price is down today as traders assess the Federal Reserve’s hawkish stance for the remainder of 2023.
With the SEC breathing fire down on the DeFi industry, the crypto market has hit hard snugs on all fronts. According to data from Kaiko, crypto trading volumes reached an annual low in the second quarter as market makers reduced their activity. Furthermore, major cryptocurrencies were under further pressure Thursday as the industry faced new hurdles on multiple fronts. To top it all off, more than $1.2 million in Bitcoin that had not moved in over 13 years recently did.
Crypto trading volumes hit new lows
According to reports, average daily volumes for the top ten tokens (excluding stablecoins) were $10 billion in the second quarter of 2023, compared to $18 billion in the first quarter of the year.
This comes as regulatory scrutiny has increased in the recent month, possibly driving traders and market makers to withdraw. The US Securities and Exchange Commission (SEC) filed lawsuits against Binance and Coinbase, two of the largest cryptocurrency exchanges, last week.
Bitcoin has lost about 20 percentage points in terms of individual token market share of trading activity in Q2 since its peak at the end of March. Ether outpaced bitcoin, increasing its volume share by 5 percentage points. Binance‘s BNB increased from 2% of volumes to over 7% in the last few days due to regulatory concerns.
How are major crypto coins performing?
Bitcoin (BTC-USD), the most popular digital currency, dropped 4% and reached its lowest level in the past three months. Other notable cryptocurrencies declined, with ether (ETH-USD) and BNB (BNB-USD) falling more than 5% and a stablecoin known as tether falling below its crucial $1 price.
According to Coinmarketcap, these declines pushed the total market value of all cryptocurrencies to its lowest point since March, when the banking turmoil began.
Also declining was the stock of Coinbase Global (COIN) and other publicly traded crypto companies. Additional crypto equities, such as MicroStrategy (MSTR), Riot Platforms (RIOT), and Marathon Digital (MARA), also declined.
The new price pressures follow Federal Reserve assurances that it will continue to raise interest rates this year, as well as reports that crypto lending platforms Delio and Haru have halted withdrawals in response to increased customer demand. Moreover, the markets are tense, to say the least.
Multiple pressure factors create an additional issue for the industry: too many sellers and not enough buyers. In the past year, major trading firms that once served as market makers have contracted.
The pressure on Tether (USDT), the market’s largest dollar-pegged stablecoin by market capitalization and trading volume, is another indication of heightened stress. Between Wednesday and Thursday, it dropped as much as 0.20%, its largest one-day decline since November.
At 2:00 a.m. New York time on Thursday, the $83 billion stablecoin, which is not supposed to fluctuate below its crucial $1 price, dropped to $0.9958. It is issued by the Tether company.
Why is the Ethereum price down today?
In other news, Ether, Ethereum‘s native coin, is down about 7% today owing to a combination of fundamental and technical factors. On June 15, Ether fell 1.7% to roughly $1,620, its lowest level in three months. The instantaneous decrease in ETH price was part of a larger weekly downturn accelerated by the Federal Reserve’s harsh tone a day earlier.
Because of the slowing of inflation, the Federal Reserve kept the benchmark interest rate steady. However, its chairman, Jerome Powell, stated that they would raise rates more than expected in 2023, all until consumer prices fell dramatically and significantly.
Ether has acted like a riskier asset in recent years, with a high positive correlation with US stock indices. On June 14 and 15, the Ethereum token fell in unison with the S&P 500, Nasdaq Composite, and Dow Jones.
According to Coinglass, Ether’s price decrease in the last 24 hours has also generated a wave of leveraged long liquidations, which totaled $54.95 million on June 15, the biggest among the top-ranking crypto assets.
Meanwhile, open interest in Ethereum-linked contracts fell from about $6 billion on June 14 to $5.69 billion on June 15. In other words, long traders closed their positions by selling ETH, potentially hastening the price decline.
BTC Whale moves $1.2M after 13 years of inactivity
According to blockchain data, a whale transferred the stash—50 BTC in total—to another wallet on Thursday. The coins were mined in June 2010 and have been dormant ever since.
Previously untouchable Bitcoin has been moving recently: in April, a holder who hadn’t touched their BTC in a decade transferred $7.8 million in Bitcoin to new accounts. After 11 years of inactivity, another long-term investor (or investors) moved $11 million in so-called digital gold just days afterwards.
If you’re looking for a quick profit, Bitcoin is currently priced at $25,028 per coin, down 3.7% in the last 24 hours and roughly 7% in the last week, according to CoinGecko. The asset has dragged the rest of the crypto market down with it, and prominent altcoins such as Ethereum and Cardano have plummeted in value as investors consider what to do in light of the Federal Reserve’s recent decision not to raise interest rates.
However, the largest cryptocurrency by market size has risen about 25,000% in the last decade, making the long-term hold strategy a winner for investors.
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