On Tuesday morning, the Bitcoin price fell back to $69,000, accompanying the general downward trend in the market. Bitcoin, which briefly approached $71,000 at the beginning of the week, fell to $69,600 with the sales wave in risky assets at the opening of the market in America.
In the last 24 hours, not only Bitcoin but also major cryptocurrencies such as Ether, Solana and XRP experienced losses ranging from 2 to 3 percent. Looking at the price movement, it is noteworthy that in the last three months, Bitcoin generally rose slightly on Mondays and then retreated slightly on Tuesdays. In Velo’s data, it is stated that this typical fluctuation of Bitcoin is repeated.
High Correlation Between Stocks and Crypto Markets
The selling trend seen in the technology sector has been closely affecting crypto asset prices, especially recently. The iShares Tech-Software sector index led with a 4 percent loss. It is noticeable that there has been a parallel trend between digital assets and this index in recent months. This led to digital asset prices accompanying the decline in technology stocks.
In the USA, declines were also recorded in the S&P 500 and Nasdaq indices; S&P 500 fell by 0.5 percent and Nasdaq fell by 0.8 percent. It is stated that the ongoing talks between the USA and Iran were especially effective in this decline. While global bond yields rose, the dollar index, known as DXY, continued to strengthen. The risk aversion trend is supported by the 2 percent increase in oil prices in the same period.
Harsh Waves in Crypto Index Companies
Shares of companies linked to cryptocurrencies also suffered sharp losses in value. There was a sudden decline of 16 percent in the shares of Circle, which launched the USDC stablecoin, following the rapid rise in the last month. This move doubled the relevant share in a short time. Similarly, there was an 8 percent loss in Coinbase shares.
This sales wave for players such as Coinbase and Circle has gained further strength with discussions on new regulations regarding the interest returns of centralized cryptocurrencies. The new draft of the Clarity Act limits the granting of interest on balances in stablecoins. Shay Boloor, market strategy manager at Futurum Equities, stated that this development hinders the aim of the USDC issued by Circle to strengthen its function as a store of value rather than a means of payment.
Shay Boloor expressed his opinion in his post: “This limitation makes it difficult for USDC to develop as a store of value; it weakens an important part of the bullish thesis.”
In a confidence-boosting move, rival company Tether announced that it has initiated a comprehensive audit process with one of the globally operating independent audit firms to ensure transparency regarding its reserves.
Recently, there has been a remarkable change of opinion in the financial markets. While predictions about how many times central banks will cut interest rates until 2026 were discussed recently, it is now estimated that interest rate increases may accelerate.
According to the current data of CME FedWatch, the expectation of a rate cut by the Federal Reserve in its April or June meetings has completely disappeared. At the June meeting, a certain possibility of an interest rate increase is given. The next president of the US Federal Reserve is projected to be Kevin Warsh; Donald Trump recommended Warsh to replace current chairman Jerome Powell. It is considered that a new approach to policy rates may be adopted after Warsh takes office.
