Last week, the Market capitalization fell from $304 billion to $254 billion, falling to about $50 billion in total. The situation after the fall was somewhat stable for a 3 days span, from 4th to 7th of August, as the market cap floated over the $250 billion mark.
After three days of the effort to survive, the market showed signs of greens yesterday with slight increase in most of the dominant currencies.
Seeing the signs of growth the bulls of the market seemed to be happy, but in a day, they were deprived of their hopes when the market cap suddenly plunged over $230 billion, losing a humongous amount of more than $20 billion in a day. This 24 hour span has been a blood bath period for most of the currencies. 9 out of the 10 dominant currencies fell drastically with an average of about -10%.
If the overall info-graphics of the market are viewed, the market shows the usual reds with drastic amounts of negative growth.
When ever we talk about cryptocurrency, the first name that comes to mind is bitcoin. Bitcoin was barely floating above the $7,000 mark and showed good signs of growth yesterday. After that, in a 24 hour period, bitcoin fell sharply to 8% and is trading at $6,514.59 at press time. Within this 24 hour period, the market cap of Bitcoin has individually fell drastically around $10 billion.
It was revealed that the reason of the plunging market was because of the rejected proposal of the ETF. There are a number of applications lined up regarding the ETF, like the second attempt by the Winklevoss brothers, which was rejected, and VanEck’s proposal, which is still in phases of progress.
This delay in the decision of the ETF has created a frustration in the market. Matthew Newton, an analyst at the trading platform eTorto said:
A green light for the bitcoin ETF would fire the starting gun on a race among institutional investors to cash-in on this new product. The market is therefore rightly frustrated by the delay to the decision.
Till the time the ETF is approved or considered, the forecast is still bearish. Although the analysts remain bullish for long term BTC perspectives, they still warn us to be cautious.
In the short terms, technical analysis is still on the bears’ side. The benchmark currency [bitcoin] doesn’t have important levels of consolidation near current trading marks. It means that after a short pause the bitcoin could slide down to the nearest consolidation level close to $6,200 mark, and even lower to $5,800.
Although institutions are backing up the currency by providing their support, but it has done little to no effect on the exponentially falling price of bitcoin. ICE, the owner of New York Stock Exchange, announced plans earlier this week about the partnership with Starbucks and Microsoft to bring bitcoin more to the mainstream. In some news, Barclays is also trying to incorporate crypto trading.
Similarly, Wall Street is working on a new platform for trading and storing digital assets. According to the Wall street bull Tom Lee:
The news that we have seen, from the SEC saying bitcoin’s a commodity, to … the potential for an [exchange-traded fund] is causing investors to decide that bitcoin is the best house in a tough market.
The latest proposal of the ETF by VanEck looks promising, however, when the director of digital asset strategy at the New York-based firm was asked about the chances of the ETF to get approved, he stated:
Unfortunately, I don’t know the answer. I do know that we have addressed market structure issues and this is a chance for regulators to bring bitcoin under existing frameworks and protect investors.
The acceptance of this ETF might give security to the investors and institutions that are willing to enter the crypto world. They also demand security and transparency, which is a challenge, as the world of crypto is full of fraudulent activities. This is the reason why the SEC rejected the proposal in the first place. SEC stated that:
Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin or blockchain technology more generally has utility or value as an innovation or an investment. Rather, the Commission is disapproving this proposed rule change because as discussed in detail below, BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices.
This decision, however was also dissented by the SEC commissioner, who stated that it is not up to the SEC to decide which innovation goes through. Similar institutional and individual support for BTC point towards the approval of the ETF proposal and the incorporation by Barclays, Starbucks, Microsoft and Wall street, might actually give the digital currency a boost.
Ethereum subtly gaining dominance
Although the dominance of Bitcoin and the news of the ETF floating around have made the analyst naturally incline towards the premium digital currency while neglecting the altcoins, but despite their drastic down growths, they are showing growth in the overall market dominance. Lagging behind BTC is Ethereum, whose dominance a few days back was at almost 14%, but the recent events of BTC falling and plunging market cap have given Ethereum a platform to grow, which it is subtly using. According to Coinmarketcap:
The subtle increase in the volumes of ethereum and its dominance is a good news for the altcoins, the reason partially also includes all the new startups that are taking birth on top of the ethereum blockchain technology. The platforms that are being given by the giants of the industry are also providing the altcoins with opportunities to grow. The future of cryptocurrency and blockchain because of these factors seem to be bright, as the promising ETF proposal also gives hopes of approval, which actually might pull the coin market’s valuation through the roof.