Cryptocurrency is undergoing a strong correction due to the influence of macroeconomic factors and new regulatory measures in the U.S.
Despite the market being in the red, on-chain indicators and institutional buying activities still show significant opportunities and that the long-term growth trend is not over.
MAIN CONTENT
The main reason for the decline is pressure from the U.S. economy and policy.
The on-chain indicators remain positive, indicating that this market is merely experiencing a temporary correction.
Large organizations continue to buy in, affirming their confidence in long-term potential.
What caused the sudden decline in the cryptocurrency market?
Pressure from the U.S. macro economy has led to a significant price drop in cryptocurrencies. Core inflation rose to 2.8%, higher than expected, along with new tariffs being applied to over 50 countries as announced by the former U.S. administration. This raises concerns about rising inflation coupled with slow economic growth.
Revised employment data also showed much weaker labor growth, dropping over 250,000 positions in May and June, making it difficult for the Federal Reserve (FED) to balance anti-inflation measures with maintaining economic growth. Rate cut plans may be postponed, which reduces investor confidence.
Has the upward trend in cryptocurrency prices ended?
On-chain data and market actions indicate that it is not yet time to end the bullish cycle. The ME Futures Premium remains high above 8% for Bitcoin and Ethereum, affirming strong hedge fund activity and no signs of panic from large investors.
The funding rate and liquidations remain stable, with no signs of a major sell-off or bubble warnings. Global M2 money supply is increasing, directly tracking the historical price of bitcoin, supporting the potential for recovery. The Pi Cycle Top indicator has not recorded a market peak signal, indicating that the bull run still has room to grow.
“Key indicators of cash flow and interest rates have not shown signs of ending, supporting the argument that the current correction is normal in a bull market phase.”
On-chain Analysis Expert, 2024
Are institutions taking advantage of the price drop to buy in?
Large organizations continue to significantly add to their cryptocurrency portfolios. Strategy currently holds 628,800 BTC, a 20% increase in the last quarter. CEO Michael Saylor also plans to raise $4.2 billion to buy more Bitcoin.
Coinbase also added 259 BTC, bringing the total to 11,776. BlackRock's IBIT ETF fund attracted $87 billion from over 1 million new investors, most of whom are newcomers.
Deloitte's survey shows that 99% of CFOs at billion-dollar companies expect to use cryptocurrency in the long term, with nearly 40% applying it for payments or investments in the next two years.
“The confidence of large organizations in cryptocurrency has not diminished; on the contrary, it has strengthened, further reinforcing the long-term growth trend of the market.”
Michael Saylor, CEO Strategy, Q1 2024
What conclusions can be drawn about the current situation and future outlook?
July is a good growth period for Bitcoin and Ethereum, but the momentum is fading as trading volume decreases and volatility increases. Skepticism about the sustainability of the price increase is strong. The FED meeting on August 7 and CPI data on August 12 will determine the market's next trend.
The market is facing a crucial testing phase, but fundamental indicators and demand from organizations still show potential for recovery and further long-term growth.
Frequently Asked Questions
What economic factors are affecting the recent decline in cryptocurrency prices?
High inflation and weaker-than-expected employment data in the U.S. are making it difficult for the FED in monetary policy, reducing investor confidence in cryptocurrencies.
Has the upward trend in cryptocurrency prices come to an end?
No, many on-chain indicators remain positive; there are no signs of a market peak and no extreme sell-off phenomena yet.
Are large organizations buying in as prices drop?
Organizations such as Strategy, Coinbase, and BlackRock continue to buy more Bitcoin and cryptocurrencies, reinforcing their confidence in the market.
What events will have the greatest impact on the cryptocurrency market in the short term?
The FED meeting on August 7 and CPI data released on August 12 could shape the next direction of the market.
What is the confidence of businesses in cryptocurrency?
Deloitte's survey shows that 99% of CFOs at large companies believe in the long-term use of cryptocurrency, with nearly 40% applying it in the next two years.
Source: https://tintucbitcoin.com/tien-dien-tu-giam-du-sec-tich-cuc/
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