The heat of June in the cryptocurrency market foreshadowed another rally, which was soon to bring Bitcoin to around $ 20,000. However, in July, “something went wrong.” Throughout the month, bitcoin does not just set new records, but becomes cheaper: last week, the BTC rate fell by 9%, and from the beginning of the month by 15%. The capitalization of the entire cryptocurrency market decreased by 18%. EXANTE analyst Viktor Argonov told BitCryptoNews about the reasons for the “cooling” of the market.
Criticism of cryptocurrencies by American politicians has become one of the main reasons for the decline. In July, U.S. President Donald Trump, Treasury Secretary Stephen Mnuchin, and the U.S. Congress teamed up with Facebook’s initiative to create the Libra stablecoin, at the same time accusing all virtual currencies of participating in illegal activities.
July 17, on the last day of unsuccessful hearings on Libra in Congress, the BTC rate reached its monthly minimum at $ 9,200. However, after a couple of days it jumped and for some time exceeded $ 11,000. Market participants noted that politicians didn’t commensurate actions followed, which fueled expectations of an early rally. Nevertheless, by the end of the month, bitcoin fell again to the level of $ 9,500, where it remains to this day.
On July 22, the day the new market downturn began, the Bakkt platform was launched in test mode, allowing you to legally trade deliverable futures on BTC. Don Stump Commissioner for Commodity Futures Committee (CFTC) said cryptocurrencies do not threaten financial stability and many large investors have long been waiting for Bakkt to launch. A full-fledged opening is planned for August-September, the arrival of institutional on the market promises a sharp increase in the price of the underlying asset.
However, between the test and actual launches of Bakkt, two factors act in favor of a drawdown in the market.
- Fear of a number of investors about new bitcoin futures. In 2017, non-deliverable bitcoin futures on Chicago exchanges became one of the main reasons for the decline due to the lack of buyers and the abundance of seller-miners against the background of a high rate.
- The desire for future Bakkt customers to buy BTC at low levels in anticipation of the launch of the platform. The Bitcoin dominance index, which reached a multi-year high of July 66.7% on July 17, fell to 64.4% over the past week. This means that criticism of officials negatively impacted the cryptocurrency market as a whole, while the test launch of the platform hit sighting on the underlying asset.
It can be concluded that today the greatest influence on the dynamics of exchange rates is exerted by external political factors and the position of major holders of virtual currencies. This means that the rest of the participants can only observe the development of events.