The cryptocurrency market has experienced considerable turbulence over the past few months. Despite a recent upturn, the market capitalization is still down 14% from its peak in March.
According to a Binance Research report, June saw a “brutal” 11.4% total market capitalization downturn coinciding with the recent German government Bitcoin (BTC) sell-off.
Large Bitcoin (BTC) movements by the United States government on June 26 and as Mt. Gox creditor repayments started on July 5, with 140,000 BTC set to re-enter the market, have only fueled the fire.
Significant Bitcoin (BTC) transactions by the United States government on June 26, combined with the commencement of Mt. Gox creditor repayments on July 5, which released 140,000 BTC back into the market, have further exacerbated the situation.
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Crypto market structural weakness
The Binance report highlights market dynamics’ structural weaknesses through its newly established Capital, People, and Technology (CPT) framework.
The framework reveals that new capital inflows have slowed, resulting in a “Player vs. Player” (PvP) market where traders compete head-to-head for limited returns.
According to the report, in this PvP market with “no new capital flows,” one market participant must incur a loss for another to profit in the ongoing “stagnant market.”
This slowed influx of liquidity is evidenced by a stagnation in stablecoin supply, reduced outflows from spot BTC exchange-traded funds (ETFs), and a decline in project funds raised.
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Positive upcoming catalysts
The Binance Research report also counterbalances the market downturn with upcoming potential catalysts that could continue to drive the market beyond the peak of March.
The report reviews macroeconomics, highlighting signs of tapering inflation and potential cuts to interest rates, poised to stimulate the crypto market and drive market capitalization.
It also speculates that new capital flows could arise through increased stablecoin supply and Ethereum ETF approvals, expected around July 23, with the potential to drive Ether (ETH) demand.
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Will $220,000 be the market peak?
Accompanying the expected driving factors for the market in the coming months, pseudonymous crypto analyst Cryptonary highlighted a shift in BTC miner capitulation.
The analyst shared a hash ribbons chart depicting the correlation between the end of miner capitulation and significant BTC price hikes through an exponential decay model.
According to Cryptonary, the model suggests that, based on historical data, the post-halving period could see a potential price peak of $223,000 for the upcoming market cycle.
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