In the early days of July 2024, the cryptocurrency markets faced a challenging situation as several top digital currencies, led by Bitcoin (BTC), experienced a sharp and significant collapse.
The beginning of the month brought two major shocks to the market. Firstly, around $130 billion was wiped out from the total market capitalization of the asset class in just one day. Shortly after, almost an equal amount vanished within an hour.
The downturn resulted in the overall cryptocurrency market cap dropping below $2 trillion for the first time since February. As of July 5, the total valuation of cryptocurrencies stood at $1.96 trillion.
Despite Bitcoin receiving most of the attention, the total crypto market cap excluding BTC also saw a significant decline from $1.03 trillion on July 1 to $880 billion by press time.
As trading resumed on July 5, there was a chance for a potential recovery. Although the current market cap remains below its yearly and June highs, it has shown signs of an uptrend, bouncing back from a low of $1.93 trillion.
Bitcoin struggled to regain the $55,000 mark on Thursday morning after trading below it for several hours overnight. However, the ongoing uptrend does not guarantee that the decline has come to an end.
The future trajectory of Bitcoin will likely be influenced by factors such as the progression of Mt. Gox repayments and the German government’s sale of Bitcoin. The pace at which Mt. Gox creditors offload their BTC holdings and the sentiment of cryptocurrency investors towards these developments will also play a crucial role.
Some experts, like Peter Shiff, do not anticipate significant selling pressure from Bitcoin ETF investors unless the price falls below $38,000. Shiff predicts that a substantial selloff may occur if Bitcoin reaches this level, which is nearly 31% lower than the current price of $54,977.
Overall, the cryptocurrency market remains volatile, and investors should exercise caution when making investment decisions. Trading in digital assets carries inherent risks, and individuals should be aware that their capital is at risk when engaging in speculative activities.
