The collective value of the cryptocurrency market dropped by 3.9% from June 20 to June 21, nearing a five-week low at $2.34 trillion. This decline impacted all of the top 10 cryptocurrencies, with Bitcoin (
BTC
) falling by 4.2%, Ether (
ETH
) experiencing a 4% loss, and BNB (
BNB
) facing a 4.2% correction. Despite some recovery from intraday losses, the market sentiment remains bearish.
Some analysts attributed this market downturn to a significant sale of Bitcoin by the German government. However, it is important to note that traditional investors in the financial sector also reacted to unfavorable macroeconomic data. Concerns about the stock market reaching its peak and the weakening fiscal situation in the United States have contributed to the negative sentiment.
Arkham, an onchain crypto analytics firm, reported that a wallet associated with the German government transferred 6,500 BTC to exchanges on June 19, amounting to $425 million at the time. This wallet, believed to have been holding around 50,000 BTC seized from the pirated movie website Movie2k, sent the Bitcoin to Kraken, Bitstamp, and Coinbase, indicating a significant sale. However, this selling pressure was offset by MicroStrategy’s purchase of 11,931 BTC for $786 million on June 20, covering the net outflow from U.S. spot Bitcoin exchange-traded funds.
With no other apparent regulatory changes affecting cryptocurrency investor sentiment recently, attention is being drawn to the traditional finance industry and macroeconomic data. While there may be a short-term correlation between the S&P 500 index and the crypto market, traders tend to move away from risky positions during uncertain times.
In the U.S., the stock market is facing a “triple witching,” where derivatives contracts tied to stock, index options, and futures are set to mature, amounting to $5.5 trillion expiring on June 21. Concerns over weaker macroeconomic data hinting at a higher recession risk have further dampened investor sentiment.
Various economic indicators, such as existing home sales in the U.S. falling for the third consecutive month, PMI readings in France and Germany coming in below expectations, and slower growth reported in the United Kingdom, have added to the negative outlook. Additionally, Japan’s inflation rising to 2.8% in May has raised concerns. Gennadiy Goldberg from TD Securities highlighted the potential standoff over the U.S. debt ceiling as a factor that could lead to another sovereign credit rating downgrade.
The sentiment worsened as China’s mid-year e-commerce festival saw a decline in sales for the first time in eight years, according to retail data provider Syntun. This event, celebrating the founding of Chinese giant JD.com, witnessed gross sales dropping by 7% compared to the previous year.
Amidst this economic backdrop, the U.S. Dollar Index reached a 50-day high at 105.85, indicating a shift of investors away from other currencies. While the S&P 500 index remained stable on June 21, some traders viewed Bitcoin’s 52% gains year-to-date in 2024 as a reason to secure profits and reduce exposure in the face of macroeconomic uncertainty.
This article is for informational purposes only and does not offer investment advice. Readers are advised to conduct their own research before making any financial decisions.