Markets
Bitcoin at $61,000 – All the reasons why the market is “cooling down”
- The price of Bitcoin around $61,000 is a victim of the market cooling and summer slowdowns
- The unblocking of Mt. Gox and government sales also raise some supply concerns
The cryptocurrency market hasn’t had a great time lately. That was the case at press time, with the total market cap of the sector down to $2.26 trillion at press time. As expected, Bitcointhe world’s largest cryptocurrency, led the way, with BTC down nearly 1% on the charts.
However, Bitcoin and the market’s major altcoins were not the only ones affected.
The memecoin market, for example, also recorded a recessionwith its market capitalization falling 1.33% to $47.89 billion. In fact, the trading volume also dropped significantly by 19.31%.
Now, various factors have contributed to this market-wide decline, both market-specific events and broader economic influences. It is therefore worth considering these factors.
Market cooling after positive news on ETH ETF
The positive news on the potential trading of Ether ETF (ETH). led to a cooling period in the cryptocurrency market. The U.S. Securities and Exchange Commission is reportedly close to approving ETFs tied to the spot price of Ether, with the expectation of approval as early as July 4th.
While this anticipation initially fueled market optimism, subsequent market adjustments contributed to the continued contraction.
Additionally, seasonal trends and reduced trading activity during the summer months are also impacting the market. Historically, June has seen mixed performances from Bitcoin, with an average return of -0.56%. Simply put, it has been one of the weakest months for the cryptocurrency.
The same happened recently highlighted from renowned market analyst Dan Crypto Trades.
Source: X
It can therefore be argued that the drop in trading volumes during the summer holiday period is leading to less market activity and greater volatility.
Concerns about Mt. Gox and government sales
The market is also facing concerns about the potential impact of government entities unlocking and selling Mt. Gox. In fact, the same has been highlighted by the latest QCP short weekend on the state of the cryptocurrency market.
Now, some believe these supply concerns may be overstated. Even so, the potential influx of Bitcoin from these sources is causing uncertainty and contributing to bearish sentiment.
Support Levels and Future Projections
Despite these bearish headlines, however, Bitcoin’s support level around $60,000 has shown resilience. If this support level weakens, however, we could see the cryptocurrency decline further. This could lead to BTC testing lower levels around $50,000.
Indeed, QCP analysts went on to say:
“We may test lower towards 50,000 levels, but the market will find strong support there, as TradFi interest continues to permeate given the general regulatory easing across the world.”
That said, the planned launch of spot ETFs for other major cryptocurrencies such as Solana (SOL) could spark renewed interest and provide some support to the market.
In light of the prevailing market conditions, analysts recommend strategies to deal with the crisis. For Bitcoin, it has been tipped to generate yield in a sideways market, with the potential to make directional bets in the fourth quarter.
For Ether, taking a short-term bullish position before the ETF launch could be beneficial.