September 27, 2023 3:33 am

Why the cryptocurrency market is experiencing a decline today?

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The cryptocurrency market continued its downward trend today, with prices falling due to several negative developments in the industry. On August 1st, the market’s net capitalization dropped by 2% to $1.16 trillion, following a report from the Financial Times.

The report stated that the U.S. Securities and Exchange Commission (SEC) had instructed Coinbase, a major U.S.-based crypto exchange, to remove all cryptocurrencies from its platform except for Bitcoin (BTC). However, Coinbase quickly refuted the report, stating that the Financial Times had omitted important context regarding their conversations with the SEC. Despite this clarification, the crypto market was unable to recover.

Adding to the market’s decline was the recent hack of Curve Finance, which resulted in a loss of $47 million. This incident further dampened the upside potential of the market, causing its valuation to decrease by approximately 3.75% or $43 billion since the hack occurred.

Another factor contributing to the market’s losses was the recent rally in the U.S. dollar index (DXY). On August 1st, the index reached its highest level in three weeks, climbing 0.57% to 102.43. This increase in the value of the dollar coincided with the decline in the crypto market. The market had reached its peak sessionally at $1.22 trillion when the DXY was at its lowest level on July 13th.

If the inverse correlation between the dollar and the crypto market persists, the market’s price decline may continue. However, from a technical perspective, there is hope for a bounce back. The market’s valuation currently tests a reliable short-term support level around $1.12 trillion. If this support holds, there is a possibility of a rebound towards $1.18 trillion, which has acted as a resistance level since March 2023.

On-chain data also supports the potential for an upside outlook. Santiment, a blockchain analytics firm, reports that the wealthiest crypto wallets have started accumulating stablecoins in late July. This accumulation coincided with the drop in the price of Bitcoin below the key psychological level of $30,000. This suggests that some investors are seeing value in stablecoins and may be preparing for a potential market recovery.

However, a decisive close below $1.12 trillion could accelerate a drop towards the 200-day exponential moving average (200-day EMA) near $1.09 trillion in August. This level mirrors the market’s performance in May and June earlier this year.

It is important to note that this article does not provide investment advice or recommendations. Investing and trading in cryptocurrencies involve risks, and readers should conduct their own research before making any decisions.

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Original Source: Why the cryptocurrency market is experiencing a decline today?

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