Crypto Market Update: Understanding the Recent Correction


Bitcoin, the market’s biggest crypto by capitalization, recently fell below the important $60,000 level, a key point for numerous investors. The fall to $55,800 from its previous high of nearly $74,000 a month ago indicates a noteworthy decrease. Various factors have played a role in this decrease.

1. Outflow from ETFs: A significant factor contributing to the decrease in Bitcoin’s price is the funds flowing out of Spot Bitcoin Exchange-Traded Funds (ETFs). Net ETF outflows have been increasing in the past week. The Net outflows of Bitcoin ETFs were at – $20 million as of 3rd July with more outflows expected as per experts. This brings the total ETF reserves to $14.2 billion as per Farside investor’s data at the time of writing.

2. Impact of Macroeconomic Factors: The overall economic conditions influence Bitcoin’s price. Increased U.S. bond yields and a more powerful U.S. Dollar Index (DXY) have created a more difficult financial environment for risky assets, such as crypto. Furthermore, the Federal Reserve’s increased hawkishness in response to ongoing inflation worries has lowered the chances of interest rate reductions, adding to the negative impact on investor confidence.

3. Shift in market structure: Bitcoin has dipped below its 200-day exponential moving average, a critical indicator for traders and investors to analyze the market structure. This shift in market structure indicates bearish sentiment in the short term. However, it can’t be used as a sole indicator for conclusions. The current market price of Bitcoin is – 5.4% less than the 200 EMA value of $58,344. 

4. Mt Gox: Mt. Gox, a crypto exchange which thrived in the early years of Bitcoin had gone bankrupt in 2014 due to a hack. The defunct exchange had held user balances for more than 10 years now. As of 5th July, the exchange started the repayment process to its customers through select centralized exchanges. This triggered a widespread fear of a sell-off since most users who bought Bitcoin a decade back will be having massive unrealized profits. As of 5th July, Mt. Gox has moved close to 47,332 BTC to begin the repayment process. 

Impact on Other Crypto Assets

Ethereum and Solana, two leading altcoins, have seen considerable price correction. Over the last week, Ethereum’s value has decreased by around 15%, while Solana has experienced a 20% drop. These drops have led to a total decrease in market capitalization of approximately $200 billion.

Market Outlook

Even after the recent decline, analysts are very positive about the future potential of Bitcoin and the crypto market. The ongoing correction may act as a beneficial restart, eliminating excessive speculation and making the way for a stronger rally in the future. Corrections of more than 10% occur often in a healthy market rally. The key point to note is that, although the market has corrected, the fundamentals of Bitcoin and other tokens remain the same. 

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Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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