Over the past week, the value of the cryptocurrency market has fallen by over 26% from 2.48 trillion USD to 1.83 trillion USD, and the price of bitcoin has plummeted by over 25% and is currently hovering around 52,000 USD. These drops can be attributed to a combination of macroeconomic factors and factors specific to cryptocurrencies, although the former currently appears to have a greater impact. And it is unlikely to initiate a long-term downward trend for the crypto market – believes Richard Teng, CEO of Binance, the world’s largest crypto exchange and leading blockchain ecosystem.
From a macroeconomic point of view, last week was characterized by significant volatility on Wall Street. Major indices and futures contracts for stocks sharply fell, resulting from growing fears about the U.S. economy entering a recession. These concerns increased following the publication of the U.S. employment report on Friday, which instilled real fear about the state of the U.S. economy. The situation was further exacerbated by ongoing geopolitical tensions, particularly related to the situation in the Middle East.
As the CEO of Binance explains, regarding cryptocurrencies specifically, the broad market sell-off triggered by recession fears led to capital flight from higher risk assets, and digital currencies are still largely seen as such. This movement was amplified by recent events in the U.S. presidential race, which some market participants see as potentially less favorable for cryptocurrencies as an asset class. Additionally, the cryptocurrency market experiences historically lower returns on investment during the summer months compared to the rest of the year. Potentially, these seasonal factors also play a role here.
“Despite these challenges, we do not see this as a sign of a long-term negative trend for the cryptocurrency market,” said Richard Teng in a recent post on platform X.
“Recent sharp drops in crypto & equity prices are influenced by macroeconomic factors. We do NOT believe it’s indicative of a long-term negative trend.”
“With potential Fed rate cuts & geopolitical volatility, there’s still significant potential for market fluctuations” – Richard Teng tweeted.
The Binance representative also added that the expected decision by the Fed to cut interest rates in September should improve prospects for the U.S. economy. He also noted that as there is still some time before the presidential elections, there is a high probability of market fluctuations.
“As the elections approach, we’re likely to witness market impacts in both directions as candidates clarify their positions on cryptocurrencies,” commented the CEO of Binance.
Source: https://managerplus.pl/rynek-krypto-skurczyl-sie-w-ciagu-tygodnia-o-1-4-co-sie-stalo-35310
