The value of the cryptocurrency market increased by 6.1% in July, influenced by favourable changes in regulations and the dynamic development of key Web3 projects. However, the beginning of August brought a slump in the market, which lost over 25% of its value. Although it quickly made up for some of the losses, the future remains uncertain and we can expect further fluctuations in the coming months – according to two recently published Binance Research reports.
In the first of these reports, Binance Research analysts summarized the events and key trends in the crypto market in July. Its value at the end of that month was 2.3 trillion USD, Bitcoin (BTC) quotations also improved by 9.7% and most of the largest cryptocurrencies. The largest increases were recorded by Solana (SOL) and Ripple (XRP) – by 30.5% and 27.6% respectively.
“Market fears in July subsided after Germany completed the sale of 50,000 BTC on centralized exchanges. Other positive events included the US SEC approval of nine ETFs on Ethereum, which started trading on July 23, and Donald Trump’s announcement at the Bitcoin 2024 conference about the potential creation of strategic Bitcoin reserves if he wins the election” – commented Binance Research analysts.
The decentralized finance (DeFi) sector also grew by 3.5% in July, reaching a value of 99.93 billion USD. The best results were achieved by the CORE, Scroll, and Mantle ecosystems. Among DeFi protocols, Polymarket stood out with over 614% increase in volume in July compared to January.
Meanwhile, the NFT token market recorded a decline of 7.1% in July. The biggest increases were recorded by Solana-based collections, such as Solana Monkey Business and Retardio Cousins, while major Ethereum and Ordinals collections recorded declines.
“The NFT market is moving from the speculative phase to the phase of practical use. Creators and platforms will have to focus on real applications, such as property certificates, digital identities, and in-game assets of real value” – emphasized Binance Research analysts in their report.
The end of July and the beginning of August brought a slump in the cryptocurrency market. On July 29, the market capitalization amounted to 2.48 trillion USD, while on August 5, it dropped to 1.8 trillion USD, marking a more than 26% decrease. The Bitcoin rate also plummeted by over 25%, as did other cryptocurrencies. However, the market quickly recovered and made up for part of the losses. Its current capitalization is nearly 2.1 trillion USD, and Bitcoin is trading around 60 thousand USD.
As noted by Binance Research in its subsequent analysis, these declines can be attributed to a combination of macroeconomic and cryptocurrency-specific factors, although the former appear to currently have a greater impact. This refers mainly to concerns about the US economy’s hard landing and sharp declines on Japanese stock markets, which influenced negative investor sentiment.
Additionally, weaker than expected employment data in the US and the entry of the Nasdaq index into a correction exacerbated fears of a recession. Rising tensions in the Middle East, especially between Iran and Israel, didn’t help either. Rumours about Jump Crypto liquidating positions and weak demand for Ethereum ETFs also contributed to increased market volatility.
Moreover, the market sentiment was spoiled by poor results from Apple, as well as Warren Buffet’s decision to reduce his stake in the company, which stirred investors’ concerns about the future of the stock market. The increasing popularity of Kamala Harris, who has not yet commented on her attitude towards the crypto market, could have also negatively affected investor sentiment – explains Binance Research.
As emphasized by Binance Research, the current drop in prices on both traditional and cryptocurrency markets is sharp and painful. As we are still in the early stages of this decline, further volatility should be expected.
Key factors shaping the market will include:
– Stock market results: Strong correlation between stock markets and cryptocurrencies means that a recovery in the stock market could positively influence cryptocurrencies, and vice versa – a poor result of stock markets will be an obstacle for cryptocurrencies.
– Central bank policy: Decisions by the US Federal Reserve on interest rates will have a significant impact on the market. Currently, the markets are expecting larger rate cuts than previously assumed, and there is even speculation about an extraordinary meeting before September.
– Activity of large investors: Decisions by the biggest players in the market can significantly influence cryptocurrency prices. Their purchases or sales may signal trend changes.
Source: https://managerplus.pl/burzliwe-lato-na-rynku-kryptowalut-co-przyniosa-kolejne-miesiace-49686
