Markets
Bitcoin at $61K – All the reasons why the market is ‘cooling off’
- Bitcoin price hovers around $61K as market cooldown and summer slowdown hits
- Mt. Gox unlocks and government sales also raise some supply concerns
The cryptocurrency market hasn’t been having the best of times lately. This was also the case at the time of publication, with the industry’s total market capitalization falling to $2.26 trillion at the time of publication. As expected, Bitcointhe world’s largest cryptocurrency, led, with BTC falling nearly 1% on the charts.
Bitcoin and the market’s top altcoins weren’t the only ones affected.
The memecoin market, for example, also saw a recession, with its market capitalization falling 1.33% to US$47.89 billion. In fact, trading volume also dropped significantly by 19.31%.
Now, several factors contributed to this market-wide decline, both market-specific events and broader economic influences. So it’s worth examining these factors.
Market cooldown after positive news about ETH ETF
The positive news about the trading potential of Ether ETFs (ETH) has led to a period of cooling in the crypto market. The U.S. Securities and Exchange Commission is reportedly close to approving ETFs tied to the spot price of Ether, with approval expected as early as July 4.
While this anticipation initially boosted market optimism, subsequent market adjustments contributed to the ongoing recession.
Furthermore, seasonal trends and reduced commercial activity during the summer months are also affecting the market. Historically, June has seen mixed Bitcoin performances, with an average return of -0.56%. Simply put, it was one of the weakest months for cryptocurrency.
The same thing happened recently highlighted by popular market analyst Dan Crypto Trades.
Source: X
It can therefore be argued that the drop in trading volumes during the summer holiday period is leading to less market activity and greater volatility.
Concerns about Mt. Gox and government sales
The market is also facing concerns about the potential impact of unlockings and selling activities of Mt. Gox by government bodies. In fact, the same was highlighted by the last QCP weekend summary on the state of the cryptocurrency market.
Now, some believe these supply concerns may be overblown. Even so, the potential influx of Bitcoin from these sources is causing uncertainty and contributing to bearish sentiment.
Support levels and future projections
Despite these bearish headlines, however, Bitcoin’s support level around $60,000 has shown resilience. If this support level weakens, we could see the cryptocurrency drop further. In doing so, BTC could possibly test lower levels around $50,000.
In fact, QCP analysts went on to say:
“We could test below 50k levels, but the market will find strong support there as TradFi interest continues to permeate given the general regulatory easing across the globe.”
That said, the early launch of spot ETFs for other major cryptocurrencies like Solana (SOL) could spark renewed interest and provide some support to the market.
In light of prevailing market conditions, analysts recommend strategies to navigate the crisis. For Bitcoin, it was suggested to generate yield in a sideways market, with the potential to make directional bets in Q4.
For Ether, taking a short-term bullish position before the ETF launch could be advantageous.