The market pull-back may also be linked to the possible cryptocurrency market crackdown caution that is probably scaring off some investors.
Following the recent bull-run of the crypto market led by Bitcoin, Ethereum, and Binance coin, the market has undergone a correction pushing the smaller market cap coins down the price curve. Bitcoin has after hitting its highest price of $64,000 fell marginally and significantly over the past few weeks, having dropped by 11% in the last 24 hours and 21% in the last 7 days. Its price performance in the last month has also been negative with a 14% loss of value.
Ethereum, the second-largest cryptocurrency by market cap has also lost 11% of its value in the last 24 hours to trade at $2,146. XRP, after a very impressive week, lost the most value in the last 24 hours among the top five, having dropped 21% to trade at $1.03. BNB was also affected by the recent pullback with a 15% loss of value. Generally, the cryptocurrency market saw $260 billion being wiped out of the market in just one day.
The current state of the crypto market is dominant throughout its history. The leading cryptocurrencies in most of the time lose a lot of their value and still bounce back for whatever reason.
According to the head of business development at Luno cryptocurrency exchange, Vijay Ayyar, the market shakeup is not a cause for concern. He believes that the market has been very busy in the last couple of months, so it needs this cool-off to set off in the next leg-up. Ayyar is certain that the overall dip of the stock market is affecting all risk-on assets. This trend is similar to the behavior of Bitcoin after touching the $42,000 price zone. The market took a deep fall until Elon Musk, the CEO of Tesla added Bitcoin to his profile.
The market pull-back may also be linked to the possible cryptocurrency market crackdown caution that is probably scaring off some investors. Jesse Powell, the CEO of the Kraken cryptocurrency exchange has warned that the market could experience another crackdown as some key US officials have raised concerns about the use of Bitcoin for money laundering and facilitating the operation of terrorists. Any regulatory crackdown on the market will affect the original use case of Bitcoin, hurt the market, and cause another market crash as happened in 2018.
Despite the threat of regulatory crackdowns, Bitcoin can still move up the price curve with the recent plan of some banks to encourage ownership of the digital asset. Morgan Stanley (NYSE: MS), for instance, is setting up three funds to encourage the ownership of digital assets.
The rising institutional interest in recent times is second to none, causing Bitcoin to rise by 71% and Ethereum by 200% this year. Tesla has invested about $1.5 billion in Bitcoin, and other institutions have allocated a portion of their funds for this purpose.
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