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The cryptocurrency market is experiencing a significant correction today, with Bitcoin (BTC) dropping below the $63,000 mark and Ethereum (ETH) falling over 4%.
The global crypto market cap has decreased by 3.7% in the past 24 hours, currently standing at $2.29 trillion.
As of June 24, 2024, Bitcoin is trading at around $62,636, down 2.7% on the day and 5.82% over the past week, according to data from CoinMarketCap. This marks a notable pullback from the leading cryptocurrency's recent highs above $65,000.
Ethereum, the second-largest cryptocurrency by market cap, has also been hit hard by the market downturn.
ETH is currently trading at $3,374, a decrease of nearly 4% over the past 24 hours and 6.06% for the week. This comes despite recent news of significant long-term holder accumulation amidst the price dip.
The broader altcoin market is also seeing red, with major cryptocurrencies like Polkadot (DOT), Solana (SOL), and Ripple (XRP) experiencing declines ranging from 2.86% to 7.17% on the day. Meme coins like Shiba Inu (SHIB) have been particularly volatile, with SHIB dropping nearly 6% in the past 24 hours and almost 17% over the week.
While cryptocurrency prices have historically seemed less affected by macroeconomic factors compared to traditional financial assets, the current correction may be influenced by broader economic uncertainty. Regulatory concerns, potential policy changes, and the environmental impact of crypto mining are all weighing on market sentiment.
For example, last week, the U.S. Securities and Exchange Commission (SEC) closed its investigation into Ethereum without filing charges to allege that sales of ETH are securities transactions. While this is a positive development for Ethereum, it remains unclear what this means for the rest of the crypto market, as other projects like Solana and Polygon face ongoing regulatory scrutiny.
Furthermore, the recently implemented Markets in Crypto-Assets (MiCA) regulation in the European Union is already having an impact on the industry. Binance, the world's largest cryptocurrency exchange, has announced plans to limit certain stablecoins to comply with the new EU crypto rules.
The current macro environment, with high inflation and interest rates, may also be causing investors to re-evaluate riskier assets like cryptocurrencies. Economic instability concerns and the potential impact of cryptocurrencies on areas like inflation, exchange rates, and monetary policy could be influencing market sentiment.
Despite the current market correction, there are some positive developments on the horizon for the crypto space. SEC Chair Gary Gensler recently indicated that spot Ethereum ETF approvals are slated for this summer, which could potentially bring more institutional investment into the Ethereum ecosystem.
Moreover, the Bitcoin options market is showing a bias for $100,000 calls, suggesting that some investors remain bullish on BTC's long-term prospects despite the short-term price weakness. However, a recent report from McKinsey suggests that widespread adoption of tokenized real-world assets (RWAs) may still be far away, with the consulting firm projecting just $2 trillion of tokenized RWAs by 2030 in their base case scenario.
As the crypto market navigates this latest correction, investors will be closely watching key support levels for Bitcoin and Ethereum. For BTC, the $60,000 psychological level remains a crucial area of support, while ETH will look to hold above the $3,000 mark.
Edited by Stacy Elliott.