Cryptocurrency Market’s Net Capitalization Drops Over 4.50% to $2.414 Trillion: Bitcoin and Ether Lead Losses

The cryptocurrency market experienced a significant drop in net capitalization, with a decrease of over 4.50% in the past 24 hours, bringing the total to $2.414 trillion on May 24. Leading this decline are top coins Bitcoin (BTCUSD) and Ether (ETHUSD), which have seen drops of approximately 3.5% and 4%, respectively.

This downturn comes on the heels of the U.S. Securities and Exchange Commission’s (SEC) approval of eight Ether exchange-traded funds (ETF), sparking a “sell-the-news” sentiment among traders. Crypto analyst Zach Rynes noted that the market had already priced in the approval, with Ether surging 20% earlier in the week.

However, the actual launch of these ETFs is pending further regulatory steps, including the approval of S-1 filings. VanEck’s amended S-1 filing is currently under SEC review, a process that could take weeks to months. Despite this delay, Rynes anticipates a “massive capital inflow” once the Ether ETF is officially launched.

The recent decline in the crypto market has also been attributed to significant liquidations in the derivatives market, totaling over $376.63 million, with the majority being long liquidations. Long positions, which bet on the price of an asset rising, were forced to sell off, increasing selling pressure and driving prices lower.

Additionally, the release of the Federal Open Market Committee’s (FOMC) minutes from their April meeting on May 22 has added pressure on risk-on assets like cryptocurrencies. Concerns about the timing for easing monetary policy and inflation rates exceeding targets have led to a rise in Treasury yields, indicating expectations of tighter monetary policy and lower liquidity.

Overall, the combination of regulatory uncertainties, liquidations, and macroeconomic factors has contributed to the recent downturn in the cryptocurrency market. Investors are advised to conduct their own research and exercise caution when making investment decisions in this volatile market.