Cryptocurrency Market Plunges As Investors Shrug Off Macro Events

Major cryptocurrencies experienced a significant downturn on Wednesday evening, as investors seemingly ignored industry-specific and macro events that had previously propelled Bitcoin’s price beyond $30,000. 

This sudden shift occurred despite reports of a Fitch downgrade of the U.S. Treasurys and MicroStrategy’s intentions to acquire additional Bitcoin, which initially contributed to the surge before causing it to plummet below $29,000.

The current market pattern, which is expected to continue, may change if the Securities and Exchange Commission (SEC) approves any of the spot bitcoin ETF applications submitted in mid-June by prominent financial services companies like BlackRock. However, it is uncertain when the SEC will make a decision.

Currently, the global crypto market capitalization stands at $1.17 trillion, a 2.14% decrease in the last day.

Stocks experienced a selloff on Wednesday, with the Nasdaq Composite suffering its worst day since February. This was primarily fueled by Fitch downgrading the long-term rating for the U.S., triggering a resurgence of risk-off sentiment.The Nasdaq Composite index faced a notable decline of 2.17%, while the S&P 500 saw a pullback of 1.38%.

Fitch Ratings made the decision to cut the long-term foreign currency issuer default rating for the U.S. from AAA to AA+ on Tuesday night. This downgrade was attributed to the anticipated fiscal deterioration over the next three years.

It’s worth noting that the last time the U.S. witnessed a major ratings agency downgrade was in 2011 when Standard & Poor’s reduced the rating to AA+ from AAA.

“Bitcoin is wavering above the $29,000 level as traders await any updates with a US spot Bitcoin ETF. We’ve seen this movie before… Michael Saylor is adding Bitcoin to MicroStrategy’s portfolio.  Fresh money has not yet been coming into the cryptoverse so range trading might remain a while longer,” said OANDA Senior Market Analyst Edward Moya.

Crypto analyst Michael Van de Poppe notes that the total market capitalization for crypto remains above the 200-Week MA and EMA, highlighting the importance of these levels to sustain. Moreover, it is worth mentioning that we have witnessed a series of higher lows since the November 2022 low, indicating the initiation of a promising new bull cycle.

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Edited by Arnab Nandy