The positive momentum evaporates as the crypto market faces a downtrend, extending the decline for an eighth day in a row.
The crypto market has been experiencing significant corrections over the past week. Bitcoin and Ethereum have lost about 12% of its value in the last 7 days, according to data from CoinMarketCap.
The flagship cryptocurrency reached a new high in 2023, breaking the $31,000 mark on April 14. But now it is facing strong corrections, with losses of up to $1000 in value almost every other day.
The reason for the decline remains unclear as no breaking news has surfaced. However, many speculate that some investors may have decided to take profits following the strong growth of the world's largest cryptocurrency in the first quarter of 2023.
Another common explanation is the cautious approach to next month when the crypto market historically experiences โsell in Mayโ.
Chip trading down
Ethereum has also stumbled in the market, as the price fell 12% last week.
Ethereum fell from a peak of $2,141 to $1,825 this weekend. This is the lowest mark since early April, wiping out the gains made during the recent successful Shanghai upgrade that took place on April 13.
Two other major coins that were recently in the talks, Ripple (XRP) and Cardano (ADA), have followed the same pattern. Both reportedly fell to a multi-week low: XRP declined by $0.4644 and ADA fell by $0.3848.
Most of the top 20 coins also joined the downtrend, down 4-6% over the past 24 hours. The total value of derivatives orders settled in the last 24 hours has reached $190 million, with long orders representing 89% of settlements.
The global crypto asset market has experienced a massive crash, with over $100 billion withdrawn. With the market still uncertain, Bloomberg analyst Mike McGlone hints at a potentially significant drop as Bitcoin and Ethereum may face resistance going forward.
Optimism in the market
Despite the current challenges, the Bloomberg analyst remains bullish on the long-term prospects for the largest cryptocurrency.
However, the tightening policies of the US Federal Reserve (Fed) and the resulting stock market crash leading to a potential recession may pose risks to all assets, including cryptocurrencies, in the near future.
Earlier this week, the EU Parliament approved the MiCA regulations. MiCA will be the first comprehensive legal framework to regulate cryptocurrencies.
This landmark development brings much-needed clarity and regulation to the rapidly evolving world of cryptocurrencies, filling a crucial gap in the regulatory landscape.
After receiving widespread praise and support from the crypto community since its proposal in 2020, MiCA will now go live next year.
While industry leaders have recognized the merits of MiCA as a positive step towards crypto regulation, there have been concerns that certain aspects are too strict.
Nonetheless, MiCA represents a bold and progressive move towards improving transparency, security and accountability in the crypto market.
More regulations coming soon
The resounding support from the EU parliament for innovative rules regulating the digital asset market has sent shockwaves of optimism throughout the global crypto community.
This momentous development is expected to generate a ripple effect of positive sentiment as it paves the way for a more secure and regulated crypto landscape in the European Union.
With increased oversight and accountability, investors and cryptocurrency enthusiasts can look forward to a more transparent and trustworthy market for digital assets. In addition, they will have to give much more personal information.
The provisions of MiCA are expected to enter into force approximately six months after their publication in the official journal of the EU, which could be around June 2024.
While there are more regulations on cryptocurrencies, the global nature of the market makes them much more difficult to regulate. Governments that are heavy-handed in regulating markets can harm their own economies.
