The market is no stranger to unpredictable price movements in the world of crypto. You can have the price swings up one day and down the next. As a relatively nascent technology and industry, the value of digital assets is understandably sensitive to various influencing factors, such as monetary policy from central banks, regulatory pressures, liquidity issues, and prices set by the force of supply and demand.
One might find it challenging to pin down the exact contributors to cryptocurrency value fluctuation; but in this article, we will look at some of the key drivers of crypto prices in recent weeks.
Crypto Latest Performance
Generally, to gauge the performance of the digital asset
class, market participants parse the price movements of the two largest
cryptocurrencies in terms of market value – Bitcoin and Ethereum. And, as of
June 20, Bitcoin and Ethereum have fallen approximately 10% and 14%,
respectively, since their peaks in May.
While this kind of negative return is a run-of-the-mill phenomenon in the
crypto sector, that would be considered a catastrophe for the conventional
stock market if it changes that aggressively in such a short amount of time. For
context, on average, the stock market only logs a 10% return on an annual
basis.
Additionally, a confluence of adverse factors has contributed to such downturns for the past month or so. First, the crypto market jittered as the SEC handling down damaging lawsuits on Binance and Coinbase, two of the most prominent entities in the crypto space (more on this later).
Next, two crypto platforms, Delio and Haru Invest, halted investor withdrawals, triggered by a flood of worried depositors pulling their money out. And finally, USDT, the world’s largest stablecoin, just broke from its peg to the dollar.
These catalysts, among other reasons, have led to undesirable price movements in the industry. Especially, the standing litigation between the SEC and Binance and Coinbase could entail a pivotal movement for the crypto-verse.
SEC vs. Binance and Coinbase
Binance (the largest crypto exchange) and Coinabase (the second-largest crypto exchange) have been the face of crypto communities for quite some time. They are the leaders in the field, and every move they make will have influential implications for the whole industry.
Well, recently Binance and Coinbase have been on a colliding path with the Securities and Exchange Commission (SEC). The SEC has sued Binance and its CEO Changpeng Zhao on allegations that the company commingled billions of user funds and subverted the SEC’s purview by allowing clients to trade on their unregulated exchange.
Similarly, the SEC sued Coinbase on the ground that the company operates as an unregistered national securities exchange and broker. But more importantly, in what will likely cause a shockwave across the industry, the SEC listed a number of cryptocurrencies as securities in the lawsuit.
These contemporary events have negatively affected digital coin value, with the question revolving around “Is a token a security?” especially consequential. Being categorized as a security will subject crypto to more stringent regulation and oversight by lawmakers. However, though that is true, digital asset advocates would also argue that a clearer regulatory framework also enables crypto to thrive and be embedded in the global financial system.
Monetary Policy from the Central Bank
Much as crypto enthusiasts like to distance themselves far away from the traditional finance system, the two are still intertwined. The most notable example is the Federal Reserve’s ongoing interest rate-hiking campaign against rampant inflation.
Since the Fed began raising rates in early 2022, both the crypto and stock markets have seen their price and valuation tumbling. The reason? As rates go up, consumers and businesses will face a higher borrowing cost. At the same time, they will enjoy a higher return holding cash, such as in a money market account. As a result, investors were in a risk-averse mode, giving cryptocurrency, as well as the stock market, the cold shoulder.
HiRiBi – a Best-in-Class Crypto Exchange
Despite facing challenging market conditions, the HiRiBi service remains resilient, steadfast, and unwavering in its commitment to providing clients with the most favourable rates for cryptocurrency exchange.
Even in the face of adversity, HiRiBi perseveres, ensuring that its customers receive optimal value and benefits. The service refuses to be deterred by market fluctuations or hardships, consistently delivering exceptional results. HiRiBi’s unwavering stability and reliability make it a trusted platform for clients seeking the best rates in the ever-evolving world of crypto exchange, solidifying its position as a leader in the industry.
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