Investing.com — Prices fell on Wednesday, further reversing the rebound seen over the weekend, as concerns about tighter regulation of the cryptocurrency industry persisted and traders were largely cautious about buying.
Broad crypto prices were also weighed down by uncertainty over U.S. interest rates, after multiple Federal Reserve officials indicated this week that the central bank is likely to keep interest rates on hold in 2024. The dollar rebounded from recent declines following their comments.
Bitcoin has fallen 1.8% over the past 24 hours to $62,336.7 by 8:21 p.m. ET (12:21 p.m. Japan time). The world's largest cryptocurrency has remained comfortably within its trading range for most of the past two months as the token's momentum waned after hitting a record high in March.
Capital flow data released earlier this week showed crypto investment products, particularly Bitcoin, posted significant outflows for the third week in a row as the hype for exchange-traded funds (ETFs) launched earlier this year dried up. It was also shown that
Regulatory turmoil dampens crypto market sentiment
A report released earlier this week showed that more than 90% of stablecoin transactions, a key aspect of crypto trading, were inorganic rather than by actual users, indicating that Questions have been raised about how much retail demand there is for the currency.
The report also raised concerns about further regulatory action against stablecoin operators, especially the largest coin operators.
In an example of a real regulatory action, a trading app robinhood market Inc. (NASDAQ:) said it could face regulatory action from the Securities and Exchange Commission over the nature of cryptographic tokens traded on its platform. The SEC has long maintained that crypto tokens are securities, and is currently embroiled in a legal battle with XRP issuers and cryptocurrency exchange Coinbase (NASDAQ:) over the issue.
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The SEC is also reportedly conducting the world's No. 1 investigation. 2This week, the decision to approve Ethereum ETFs for spot trading in the U.S. market was postponed to July, citing the possibility that virtual currencies are securities.
However, regulators are widely expected to reject the ETF's application.
Crypto prices today: Altcoins fall amid rate uncertainty
Broad cryptocurrency prices fell after US Federal Reserve officials said the central bank was likely to keep interest rates on hold for the rest of the year, also under pressure from a sharp rise in the dollar.
Ethereum fell 2.5% to $2,996.41, while XRP fell 6.1% and 2.7%, respectively.
A prolonged period of high interest rates in the US bodes poorly for the cryptocurrency market, given that the sector typically benefits from a low interest rate and high liquidity environment.
Volatility indicators suggest that crypto market conditions are more stable – Report
A Bitcoin price metric known as the volatility risk premium (VRP) currently indicates relatively benign market conditions going forward, which long-term investors may view as a positive, CoinDesk said. reported on Wednesday.
VRP measures the difference between an asset's option implied volatility, which measures expected price changes, and its actual volatility over time. This spread reflects the seller of an additional premium option seeking to offset the risk of future market uncertainty.
According to Bitfinex analyst data, one-month VRP sharply declined from 15% to 2.5% following the halving of Bitcoin blockchain mining rewards on April 20th. The calculation is based on the difference from Volmex's Bitcoin 30-day Implied Volatility Index (BVIV). and one-month realized volatility (VBRV).
“The significant contraction in VRP signals a recalibration of market expectations towards a more stable and predictable environment post-halving,” Bitfinex analysts said in a note obtained by CoinDesk. Stated.
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“The market consensus appears to be that future volatility post-halving may be less than previously expected.”
In other words, uncertainty is reduced and market participants expect more stable market conditions.
