Bitcoin and Ethereum were under pressure even as they traded above key levels of $20,000 and $1,000, respectively, on Wednesday evening, with the global cryptocurrency market cap falling 1% intraday to $898.1 billion at press time.
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Why It Matters: Bitcoin slipped below the $20,000 mark on Tuesday, touching a low of $19,937.79 over 24 hours, while Ethereum teetered around the $1,000 mark in the same time frame but managed to hold on to the level.
Cryptocurrency markets were under pressure after news emerged that a court in the British Virgin Islands had ordered the liquidation of the Zhu Su-led Three Arrows Capital (3AC) hedge fund.
Risk assets like stocks also remained soft amid “limited optimism” from earnings data supplied by retailers, according to Edward Moya, a senior market analyst from OANDA.
The analyst noted that investors removed $10 billion out of equity funds last week alone and it seems unlikely the sentiment on the U.S. Federal Reserve delivering a “soft landing” will improve drastically.
Moya also said, “If Bitcoin breaks below the recent low of around $17,500, there isn't much support until the $14,500 level.”
On Wednesday, Fed Chair Jerome Powell said the central bank won’t let the economy slip into a “higher inflation regime,” reported Reuters.
“The clock is kind of running on how long will you remain in a low-inflation regime ... The risk is that because of the multiplicity of shocks you start to transition into a higher inflation regime, and our job is to literally prevent that from happening and we will prevent that from happening,” said the central banker.
Cryptocurrency trader Justin Bennett said the total cryptocurrency market cap is likely headed to the $700-$730 billion level, which is a downside of another nearly 19%-22% from current levels.
“We could see a more significant relief rally from there, but it all depends on what's happening with inflation, the Fed, etc,” said Bennett in a recent tweet.
$TOTAL is likely heading to $700-$730B. This has been my base case since May.— Justin Bennett (@JustinBennettFX) June 29, 2022
We could see a more significant relief rally from there, but it all depends on what's happening with inflation, the Fed, etc. $BTC $ETH pic.twitter.com/WSG7C2eXLn
On-chain analytics firm Glassnode said while small Bitcoin holders or Shrimps, holding less than 1 BTC, and Whales with more than 1,000 BTC holdings have been accumulating, miners have been distributing.
Within the extremely challenging #Bitcoin market conditions of 2022, there are three entity cohorts with very interesting dynamics:— glassnode (@glassnode) June 29, 2022
- Shrimp < 1 $BTC are stacking
- Whales > 1k $BTC are stacking
- Miners are distributing
A thread exploring these entities 1/4 pic.twitter.com/rxYcNxausS
Shrimps have been adding 36,750 BTC a month, which is 0.2% of the circulating supply and 1.36x of monthly issuance. Whales, on the other hand, have been acquiring 140,000 BTC a month directly from exchanges. They account for 45.6% of Bitcoin supply, said Glassnode in a Twitter thread.
“Miners, who have been under immense income stress of late are in distribution mode," said Glassnode.
With the exclusion of Patoshi (an early Bitcoin miner believed by some to be BTC founder Satoshi Nakamoto) and some unknowns, miners hold 65,200 BTC in aggregate and are distributing 3,000-4,000 BTC a month, noted Glassnode.
Miner stress could lead to more unloading going forward, said OANDA’s Moya. “There is a big risk that we could see miners be forced to unload some of their holdings as they’ve overcommitted with GPUs. The big transition to a proof-of-stake (POS) for Ethereum is a game-changer that could hurt miners who financed a lot of hardware.”
Meanwhile, With more than a 12% weekly rise in price, Dogecoin appears to be an exception to the cryptocurrency downturn. The memecoin has been experiencing a 32% increase in its network activity, according to market intelligence platform Santiment.
Whatever your opinion may be on #Dogecoin and #ShibaInu, it appears as though they are each showing notable increases in network activity. Over the past 10 days especially, $DOGE (+32%) and $SHIB (+35%) have seen many returning network interactions. https://t.co/LDiWKEJIMg pic.twitter.com/JMjWQDzmtB— Santiment (@santimentfeed) June 29, 2022
Photo by Jin Odin on Shutterstock
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