The decline in overall trading volume to $63.63 billion indicates that price movements are slow for cryptocurrencies, but other factors also indicate the same. Trading volume dropped 17% in just one day, dropping the overall crypto market cap to $2.3 trillion. However, the fear and greed index also moved away from the bulls.
Cryptocurrencies are falling: What is the reason?
The result of the market decline was that the prices of Bitcoin and Ethereum, as well as many other cryptocurrencies, fell. Bitcoin is trading at $62,309.95 after a 2% drop and Ethereum price is trading at $2,999.41 after a 2.2% drop. The decline seems to continue for now, pushing other cryptocurrencies down as well.
The crypto market has been moving sideways for weeks and has only increased slightly in the last few days. However, this was also disturbed by the decline that started today due to new regulatory issues in the crypto market. Apart from this, the decline in Bitcoin Futures ETF and foreign exchange flows reduced investor sentiment, creating bearish situations.
SEC intervention in the cryptocurrency market
With the exchange receiving Wells notice from these US regulators, Robinhood became the SEC’s next target. Robinhood recently disclosed this information in a filing on Monday, saying:
On May 4, 2024, RHC received a “Well Notice” from the SEC Staff (“Staff”) stating that the Staff notified RHC that it had made a “preliminary determination” to recommend that the SEC file an enforcement action against it. RHC alleges violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934, as amended
As a result, the exchange decided to discontinue all cryptocurrencies that were called or named securities by the SEC. This isn’t the first time Robinhood has removed support for cryptocurrencies. Previously, when the SEC got involved in Binance and Coinbase and called Cardano, Solana, and Polygon securities, Robinhood immediately removed these three cryptocurrencies.
Outflows in Bitcoin ETFs, low BTC inflow rate
Last week marked the fourth week that the crypto market witnessed increased outflows, with AUM (Assets Under Management) falling by $251 million. These outflows continued despite the launch of Hong Kong Bitcoin and Ethereum ETFs. These maximum outflows were noticed in the case of Bitcoin; $284 million was withdrawn from the funds. This continuity in outflows has directly affected Bitcoin prices, reducing the popularity of the Bitcoin ETF. In contrast, Ethereum broke its one-week breakout streak with a record inflow of $30 Million. So this makes the total inflow of Hong Kong ETFs in the first week after their launch at US$307 million.
Apart from losses in Bitcoin ETF inflows, stock market inflows fell to the lowest level in the last decade. Similar to 2015, the Bitcoin exchange entry value currently stands at only 20 thousand BTC. Moreover, long-term holders stopped distribution to reaccumulate Bitcoin. The crypto market may witness a complete bearish trend as Bitcoin moves towards an accumulation zone. Several analysts have talked about the possibility of Bitcoin breaking $50,000 before returning to its all-time high.
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