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Bitcoin and Cryptocurrency Market Selloff

What Happened? Overall sentiment in the markets continue to be...
crypto-reports

By crypto-reports

 

June 11, 2022

What Happened?

Overall sentiment in the markets continue to be negative. This week, both the traditional markets and crypto markets have seen a sharp downturn in prices. People are worried about stagflation, a well-deserved fear given the 8.6% CPI growth year over year that was announced on June 10th.

Due to the worse than expected inflation numbers, the bitcoin broke through its $30,000 floor price and reached a daily low of $28,978.15. The market has still not been able to bounce back to its previous $30,000 price. Given the fluctuations below the floor price, it is possible to see additional loses in the short term.

What are the Wider Implications?

The crypto market is reliant on BTC as an indicator. As such, the overall market tends to move in unison with BTC. That has indeed been the case as other top cryptos, such as ETH and Cardano, have a daily loss of more than double of BTC’s daily loss.

What Else is Causing Prices to Fall this Week?

Although there are many reasons for BTC prices to fall this week, there was another negative impact to the cryptocurrency market on June 6th. On Tuesday, June 6th, the Securities and Exchange Commission (SEC) announced the possibility of investigating BNB token. Given the size of BNB at $47 billion USD along with the implications for its stablecoin BUSD with a size of $18 billion USD, the market naturally reacted negatively to the news.

Investors are still reeling from the crash of Luna and its counterpart, Terra USD. So any possible investigation into another stablecoin sent investors into a panic.

Additionally, the equities market has started to retest its lows as the S&P 500 hit $3,900 this week. Although theoretically, many analysts believe that the price of BTC and S&P 500 should be unrelated, the fact of the matter is the two have been moving in lockstep for most of 2022.

Where Will BTC Prices Go?

It is impossible to accurately guess where the prices of BTC are headed. Most analysts are bullish, with even JPMorgan commenting that there is currently 30% upside potential for BTC. BTC is referred to by some as a new type of commodity, a storgage of wealth or even digital gold. Given commodities tend to do well in times of inflation, BTC may only be seeing a temporary loss in value which will reverse.  

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