Crypto Markets see the Blackest Monday in YearsJune 14, 2022
The start of June has not been kind to the crypto markets just as much as it treated traditional stocks harshly. However, June 13 and this very dark Monday for both the stock market and the cryptocurrencies managed to make it even more disastrous for traders and investors. In the space of a single day, all of the token prices slid down by anywhere between 15 and 25 percent. At one point, that took the price of bitcoin’s BTC token to its lowest level since December 2020. The traditional stock market did not fare any better with the S&P 500 seeing all of its members go into a deep red.
What is just as worrying is the fact that there is no way of knowing if the market bottomed out or if the slide will continue in the coming days and weeks. The movement made a huge commotion across the crypto space and panic quickly ensued, spreading through esports forums, social media, and many other online locations, as it does in similar situations. Now, the tremors are still ongoing and further hard and quick movements down are more likely than any big relief rally. This also puts the crypto markets squarely in the Crypto Winter territory, while the traditional economy is likely already in recession mode. None of that is good news at the moment, but with the numerous global crises brewing or ongoing, things could take a turn for the worse more easily than any turn for the better.
20 Percent Drop
The crypto market woke on Monday, 13 June with a high level of volatility spilling over from the weekend. That included a chance for a relief rally, as the prices fell substantially over the weekend and the start of the week saw a rise in volume. The Asian markets began moving funds onto the exchanges, but the rally did not occur. Instead, the prices entered a tailspin that lasted well through the day. The final score of the day was a drastic fall of all major and minor tokens, including both BTC and ETH. The bitcoin network lost around 19 percent of its value in terms of price that day.
ETH token had an even worse time. It fell by over 22 percent, coming dangerously close to the four-digit support line. If that one is broken, ETH will drop to the 900 USD range or below for the first time in over a year. Of course, the whole collapse saw a huge outflow of funds from the crypto networks. That is why presently the market capitalization of the entire crypto space is at its lowest level since the end of 2020, weeks before the end of the year rally began.
Below One Trillion USD
The combined market capitalization of the digital currency space now stands below one trillion USD. That is probably a worse piece of news to come out from this black Monday. The drop occurred in the otherwise very negative atmosphere of macroeconomic factors. These include rising fears of inflation and a range of bad news coming, surprisingly, from the crypto space itself. Bad news dates back several weeks when the Terra blockchain imploded and took down cryptocurrencies like Luna to zero USD.
The same trend continued recently with the Celsius network announcing that it is pausing all of its withdrawals. The reason that the network started was because of extreme market conditions. Binance, one of the biggest digital currency exchanges in the world, stopped all BTC transactions as well, while the public expected the same to happen with other similar companies. All of this paints a very grim picture for the coming period and generally low levels of volume. The issue of the Crypto Winter is no longer if the same is here, but how deep will it go and how long will it last.
Storm of Influences
Analysts are unified in their view that the present crypto crash occurred in a conflagration of a range of influences and factors. However, this storm, no matter how expected it might have been, is still exceedingly dark and sprawling. From the global turmoil in the economic, security, and political sense, but also all the way to the issues and vulnerabilities of the actual blockchain networks, the crypto space is now in full bear mode.
But, even that is at the present moment a mixed blessing for bear traders. Bitcoin bears are now in a state of excitement, but they too cannot fully employ the same situation for their benefit. However, most of them are definitely trying to push the market further down and thus exploit some possibility for strong profit-taking in the near future.
Despite the bear activities, the bitcoin network is struggling to form a substantial and sustainable base for its token price. That is presently around the 22,000 USD range. The same figure is also important because it protects an important psychological barrier. Below the 20,000 USD, the BTC token will revert to a position that it did not hold since December 2020, which took place right in the middle of the COVID-19 pandemic. That moment would open up the doors for a further slide down, which would likely test the 15,000 USD range, if not well below that as well.
Because of that, the base for bitcoin and all other digital currencies will likely be defined by the US FED. The central bank of the biggest economy in the world will hold a two-day meeting which will likely see an interest rate hike that should curve the high inflation numbers. The US CPI is presently at its 40-year high and the chances of its receding without a big move by the FED are now nearly gone. In this volatile period for the global traditional economy, the cryptosphere will react like it usually does and add even higher levels of volatility to its markets. However, with low volume, the chance of recovery or a relief rally is very slim. The cold winds of the Crypto Winter are now truly here.