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Crypto Market Downtrend after Delisting Announcement
The cryptocurrency market has taken a hit after Robinhood's revelation of delisting 'unregistered securities' tokens from its platform.
On June 10, the crypto market witnessed a fall of 7%, dropping below the $1 trillion mark. This downward trend followed a week that saw significant exchanges like Binance and Coinbase grappling with regulatory challenges imposed by the U.S. Securities and Exchange Commission (SEC).
Impact on Leading Cryptocurrencies
Bitcoin, the cryptocurrency with the highest market capitalization, experienced a 3.75% dip, landing around $25,500. Ethereum, the second-largest crypto, plummeted by 6.9% to approximately $1,700, representing its lowest point in two months.
However, the tokens categorized as 'unregistered securities' in the SEC lawsuits—primarily Cardano, Solana, and Polygon—were the hardest hit, recording 22%, 25%, and 30% drops, respectively, on June 10.
Triggers for the Crypto Market Decline
The crypto market's downfall seemed to have stemmed from Robinhood's decision to remove SOL, ADA, and MATIC from its digital trading platform starting June 27. This decision arose due to 'a cloud of uncertainty surrounding these assets' amidst the SEC's increasing scrutiny.
Further, Crypto.com's suspension of its institutional investment services in the U.S. added to the market's worries.
The potential influence of Binance reportedly offloading $4.4 billion in crypto assets in recent weeks can't be overlooked. Independent analyst Googly observed a significant decrease in the exchange's 'proof-of-reserves,' indicating potential downward price pressure. However, Binance founder Changpeng Zhao ("CZ"), who is also implicated in the SEC lawsuit, dismissed these allegations.
Bullish Traders Caught Off-Guard
The sudden drop in Bitcoin's price caught bullish options traders off guard, leading to the liquidation of long positions worth over $340 million within 24 hours, as per Coinglass data.
Stablecoin Data Suggests Potential for Buying
During the crypto market's downward streak, there has been a notable increase in Tether's supply, the largest stablecoin by market capitalization. Conversely, other major stablecoins such as USD Coin and Binance USD have seen a decrease in market capitalization.
This can be corroborated by significant transfers from cryptocurrencies to Tether addresses, predominantly owned by wealthy investors holding over 100,000 USDT.
Interestingly, the number of entities possessing between $100,000 and $1 billion in USDT has risen in June, whereas addresses holding more than 1 billion USDT have seen a decrease in supply. This decrease could be attributed to crypto exchanges.
What Lies Ahead for the Crypto Market?
Despite the current downturn, some analysts firmly believe that such trends are not new to Bitcoin or the broader cryptocurrency market.
However, from a technical standpoint, the crypto market capitalization has breached its critical long-term support of the 200-week exponential moving average (200-week EMA), signaling potential downside risks in 2023.
If the market dips further below the 200-week EMA, we might see the market capitalization landing around $875 billion, representing a 25% reduction from current levels.
On the flip side, optimists will point out an inverse-head-and-shoulders (IH&S) pattern in the weekly chart, projecting a price target around $2.23 trillion for 2023-2024—more than double the present value.
