The cryptocurrency market experienced a downturn on Thursday as bearish sentiment gripped investors, primarily due to Bitcoin’s price action. According to the latest crypto price oracles, the total crypto market cap dropped by about 1.7 percent, amounting to approximately $1.21 trillion on Thursday.
Bitcoin price was observed trading around $29k across various exchanges, with crypto experts closely monitoring its reaction near the crucial support level of $28.4k. Additionally, altcoins failed to capitalize on Bitcoin’s weakness, signaling further bearish sentiments.
Key Reasons Behind the Bearish Sentiments:
- Curve Finance and AAVE Protocol Fiasco: The recent incident shed light on the issues prevailing in the name of decentralization. Questions were raised about the AAVE protocol’s approval of a $60 million USDT loan, backed by 300 million CRV tokens that showed minimal liquidity on DeFi networks.
- SEC’s Continued Pursuit of Crypto Projects: The United States Securities and Exchange Commission (SEC) intensified its scrutiny of crypto projects. In a notable development, SDNY District Judge Jed Rakoff allowed charges filed by the SEC against Terraforms Labs and Don Kwon to proceed, following the Ripple ruling on XRP sales.
- Rug Pull on BALD Namecoin: The recent incident involving BALD namecoin raised fear among new crypto traders, despite assurances of increased regulatory scrutiny in the market.
- Slumping Crypto Trading Volume: Surprisingly, the third Litecoin halving event took place on Wednesday, but the crypto trading volume witnessed a significant slump.
- Heightened Whale Activity: On-chain data revealed a significant surge in crypto whale activity, adding to the overall fear of bearish sentiment prevailing in the market.
It is evident that the crypto market is currently grappling with various challenges, affecting investor confidence and driving bearish sentiments. Traders are keeping a close eye on Bitcoin’s price movements, as it could have a significant impact on the entire market.
Additionally, regulatory actions by the SEC are adding to the uncertainty in the crypto space. Increased regulatory scrutiny and the need for greater transparency might be vital for restoring confidence and stability in the cryptocurrency market.
