Why Is the Crypto Market Down Today?

In this post:

  • The SEC approved Ethereum spot ETFs as expected by the industry.
  • Crypto markets, led by Bitcoin and Ether, have tumbled thanks to massive liquidations.
  • Experts generally believe it is a short-term retraction and expect the bulls to rise once inflows into the ETFs begin.

The United States Securities and Exchange Commission (SEC) approved all spot Ethereum ETFs a few hours ago. This approval was expected to be the final catalyst to usher the cryptocurrency market into the highly anticipated 2024 ‘bull run.’ However, as of the time of writing, markets are in the red.

Also Read: SEC Approves All Spot Ethereum ETFs

All the cryptocurrencies in the top ten have tumbled over the past day, even though they were all on a high yesterday, before the approval. A similar pattern emerged in January when markets plunged in the days that followed the approval of spot Bitcoin ETFs.

So, why does it happen? Why is the crypto market down today?

Why Is the Crypto Market Down Today?
Source: CoinGecko

Crypto Market Sees a Correction

Just moments before the SEC made its decision, the crypto market experienced $120 billion in liquidations. Bitcoin fell far below its critical support level of $70,000. On the other hand, Ethereum remains far above its key level of $3,500. On-chain metrics show a massive inflow of cryptocurrencies to exchanges, which typically happens right before markets correct.

Also Read: Bitcoin Heads for $140K if History Repeats Itself

In the crypto community, some seem to believe that, much like their Bitcoin counterparts, Ethereum ETFs were never going to boost the market. The regulatory developments might not have had the expected impact on stabilizing the market.

Experts Predicted the Price Drop

A market downturn is a common reaction to a highly anticipated event, and investors look to capitalize on the news by selling off their holdings. Additionally, broader economic factors such as rising US Treasury yields and delays in expected Federal Reserve rate cuts have contributed to a risk-off sentiment in the market.

Experts like CryptoQuant were already expecting the correction. Renowned analyst Faibik said he isn’t moved by the tumble and still strongly believes Bitcoin will top $100k this year. An analysis from prominent expert Michael van de Poppe states:

Why is the market not moving for Ethereum? Well, the approval was already priced in due to the strong 20% move. It’s a waiting time until the listing takes place, and then the inflow will provide whether there’s a strong continuation upwards.

Meanwhile, institutions like Standard Chartered and Bernstein remain bullish on the long-term prospects of crypto markets, expecting Bitcoin to hit $200,000 and Ether to top $7,000​.

It Is a Bullish Week for Crypto

This week has been bullish for the market. First, the US House of Representatives passed the FIT21 bill. This first-of-its-kind bill aims to legalize blockchain and cryptocurrencies in the country. Second, the Federal Reserve was recently banned from creating a CBDC.

Experts have been vehemently against the CBDC for years, citing issues like invasion of privacy and surveillance by the American government. Congress called Biden out in particular for wanting to use the CBDC as a weapon to control Americans’ finances.

The SEC’s approval of all eight Ethereum spot ETFs was the biggest news of all.

“We’re about to see an insane volatility,” predicted van de Poppe immediately after the news of approval came.

Cryptopolitan reporting by Jai Hamid

Subjects tagged in this post: | | |

DisclaimerThe information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

Share link:

Most read

Loading Most Read articles...

Stay on top of crypto news, get daily updates in your inbox

Related News

Subscribe to CryptoPolitan