The Latest Crypto Market News: July 5 12
Whats happening in the crypto market? Is Bitcoin rising, or is crypto dying? Find answers to all these questions and more in our weekly crypto news round-up.
Bitcoin Price Still Down: What is Happening?
Over the past week, Bitcoins price has experienced a marginal rise amidst a broader decline. The cryptocurrency, after a significant slump of about 15% over the past month, is struggling to maintain stability due to fears of increased token supplies.
These concerns are primarily driven by the distribution of tokens from the defunct Mt. Gox exchange and the German governments offloading of confiscated Bitcoin. The redistribution of approximately $9 billion worth of Bitcoin from Mt. Gox and potential sales of up to $2 billion by the German government have amplified fears of oversupply in the market. Adding to the bearish sentiment, Bitcoin miners are now contemplating selling their holdings to break even, particularly after the recent halving event which reduced their rewards.
Despite these pressures, Bitcoin saw a minor increase of 0.1%, reaching $58,549.6. There has been some respite due to bargain buying, which has helped mitigate losses and stabilize the price above its four-month lows. Additionally, capital inflows into Bitcoin investment products, especially exchange-traded funds (ETFs), have inspired some confidence among investors, aiding in the prevention of further declines.
Bitcoins correlation with U.S. equities has been fluctuating, contributing to its volatile performance. The recent downturn in the Nasdaq Composite and the S&P 500, despite hitting record highs earlier, has negatively impacted Bitcoin, reflecting its vulnerability to broader market trends.
What does this mean for the crypto market?
In the short term, the increased supply of Bitcoin from Mt. Gox and the German government, combined with potential sales from miners, poses a significant risk of further price declines. Investors may experience heightened volatility and should brace for possible downturns, particularly if broader financial markets also face corrections. Historical precedence shows that similar events, such as the 2014 Mt. Gox collapse and government sell-offs, have led to short-term price drops and market instability.
In the long term, however, the redistribution of Bitcoin to a broader base of holders could potentially benefit the market by reducing concentration among a few large entities. The increase in institutional support through ETF inflows also indicates a growing acceptance of Bitcoin within mainstream financial markets, which could foster a more stable and mature market environment. Historically, periods of significant redistribution and accumulation by whales have often preceded major rallies, as seen in late 2020 and the second half of 2023. If the current accumulation trend continues and broader economic conditions stabilize, Bitcoin could potentially embark on a new upward trajectory, reaffirming its status as a valuable digital asset.
CFTS Chair Reiterates That Bitcoin and Ethereum Are Commodities
Last week, the Commodity Futures Trading Commission (CFTC) Chair, Rostin Behnam, reiterated his stance that Bitcoin and Ethereum should be classified as commodities. This assertion came during his testimony before the U.S. Senate Committee on Agriculture, Nutrition, and Forestry on July 9. Behnams statements were supported by a recent ruling from an Illinois district court, which in the context of a $120 million Ponzi scheme case, declared that Bitcoin and Ethereum qualify as commodities under the Commodity Exchange Act. This ruling also extended to other cryptocurrencies like Olympus (OHM) and KlimaDAO (KLIMA).
Behnam emphasized the importance of this classification, citing a 2022 report from the Financial Stability Oversight Council (FSOC) that highlighted regulatory gaps in the spot market for digital assets that are not securities. He argued that the CFTC should be granted more authority to oversee digital commodities to protect investors and the financial system. He outlined five legislative priorities for the CFTC, including tailored rules for cryptocurrencies, a permanent fee-for-service funding model, comprehensive disclosure requirements, and enhanced Know Your Customer (KYC) and Anti-Money Laundering (AML) capabilities.
Additionally, the Senate Agriculture Committee Chairwoman Debbie Stabenow hinted at an upcoming legislative proposal for crypto oversight. However, her efforts have faced resistance from some industry stakeholders and Republican committee members who believe more work is needed to gain the necessary support for the proposal. Meanwhile, the U.S. House of Representatives has made more progress on crypto legislation, passing a broad market structure bill with bipartisan support, though the Senate has been slower to act.
What does this mean for the crypto market?
The classification of Bitcoin and Ethereum as commodities and the push for more comprehensive regulation could create short-term uncertainty and volatility in the crypto markets. Regulatory changes often lead to market adjustments as investors react to new rules and potential enforcement actions. However, clear regulatory frameworks can also provide more stability and confidence for investors in the long term, potentially reducing the risk of fraud and market manipulation.
Is the crypto market down this week?
Although the crypto market is still not back on its feet after the previous weeks poor performance, there have been some small positive changes. Bitcoin (+5.2%) and Ethereum (+7%) are both up this week, as well as Solana (+7%), XRP (+14.6%), and all other cryptocurrencies in the top 10.
Within the top 100, the biggest winner was Toncoins token NOT (+57.57%). Celestia (+48.8%) and MANTRA (+36.4%) have also shown good results. The biggest loser within the top 100 this week was Flare, recording a relatively small loss of -5.2%.
Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the authors opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
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