Crypto market plummets under 2 trillion uncovering the reasons
In the dawn of July 2024, the landscape of digital currencies was on shaky ground as a host of key virtual currencies, led by the trailblazer Bitcoin (BTC), plunged into a swift and significant downturn.
The onset of the month was marked by two substantial jolts. Initially, a staggering $130 billion vanished from the collective market cap of these assets in a mere 24 hours, followed shortly by an equivalent loss within just an hour.
This decline also resulted in the crypto market’s total worth dipping below the $2 trillion mark for the first time since the end of February. As of July 5, the cumulative value of all cryptocurrencies was recorded at $1.96 trillion.
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**Snapshot: 7-Day Total Crypto Market Capitalization Chart.** Source: TradingView
This slump hasn’t solely impacted Bitcoin, despite it being the focal point of the crypto universe. The total market cap excluding Bitcoin plummeted by about $150 billion, from $1.03 trillion on July 1 to $880 billion currently.
**Chart: 7-Day Crypto Market Cap Excluding BTC.** Source: TradingView
**Is a $2 Trillion Crypto Market Rebound Possible on July 5?**
Trading activity in the wee hours of July 5 hints at a potential rebound. Although the present market cap is significantly lower than its annual peak and even below June’s figures, it has shown signs of an upswing after seemingly hitting a low at $1.93 trillion.
A closer look at Bitcoin reveals its struggle to reclaim the $55,000 mark early Thursday, after lingering below that threshold for several hours overnight. Yet, this upward trend doesn’t solidify the end of the downturn.
**Bitcoin’s 7-Day Price Trajectory.** Source: Finbold
In recent times, Bitcoin has shed its relatively stable position around $67,000, only to tease a comeback at each critical support level – near $61,000, $60,000, and $57,000.
The future path of the currency will likely hinge on the perceived threat level posed by the Mt. Gox repayments and the German government’s Bitcoin divestment among crypto investors. The rate of Mt. Gox repayments and the eagerness of creditors to offload their long-awaited Bitcoin will also be crucial factors.
Moreover, financial commentator Peter Shiff is skeptical that Bitcoin will encounter significant sell-off pressure from those invested in Bitcoin exchange-traded funds (BTC ETFs).
“Considering the current price at $54K, I estimate that over 70% of Bitcoin ETF purchasers are in the red. If Bitcoin’s price drops below $38K, then all Bitcoin ETF investors will be facing losses. That’s the point where I anticipate a real sell-off to commence, as the majority of crypto ETF speculators will likely capitulate.”
— Peter Schiff (@PeterSchiff), July 5, 2024
According to a recent post by Shiff on July 5, most ETF investors haven’t yet incurred losses but are expected to start liquidating if Bitcoin’s price descends below $38,000. Given the current price of $54,977, the threshold for significant concern would only be crossed after an additional drop of 30.88%. At that juncture, a disastrous sell-off would probably already be underway.
**Disclaimer:**
The information provided here should not be interpreted as financial guidance. Investment activities are inherently speculative, and there is always a risk involved with capital investment.