- Bitcoin experiences volatility and selling pressure due to SEC lawsuits against Binance and Coinbase. The market shows a brief recovery but remains uncertain.
- The decrease in stablecoin balances held in exchange addresses suggests lower buying demand in the crypto market. Higher-than-usual volatility is expected as trading volumes increase.
The world’s largest cryptocurrency Bitcoin (BTC) continues to show volatility and has once again come under strong selling pressure. In the early trading hours of the Asian market on Thursday, June 8, the Bitcoin (BTC) price tanked nearly 2 percent and is currently trading at $26,436 with a market cap of $512 billion.
The price volatility in Bitcoin and the broader cryptocurrency market comes following the SEC lawsuits filed on crypto exchanges Binance and Coinbase. On Tuesday evening, the BTC price made a sharp V-shaped recovery soaring all the way to $27,000. However, it remained short-lived.
Amid the SEC lawsuits and the strong regulatory action, experts believe that the volatility in the crypto space will continue for days and even weeks together. On the other hand, the FOMC meeting scheduled next week on June 14 will determine the next course of action for the crypto market. Speaking to CoinDesk, Ruslan Lienkha, chief of markets at Web3 crypto and fiat service provider YouHodler said:
In general, the market seems in better shape and better prepared for possible outcomes. Undoubtedly, crypto market participants are doing a better job at managing risks than they did two to three years ago.
Altcoins continue to take a heavy beating. Binance’s native BNB coin has corrected by 15 percent on the weekly charts. Other top 10 altcoins – Cardano’s ADA, Polygon’s MATIC, and Solana’s SOL – names in the SEC lawsuit have also registered double-digit losses over the last week.
Stablecoin Balances and Crypto Trading Volumes
Although the macro conditions, SEC lawsuits, and other things have been impacting Bitcoin and the broader crypto market, however, the stablecoin balances on the exchanges will give a better idea of where’s the market moving next.
The total number of stablecoins on the exchanges often serves as a precursor to the buying demand on the exchange. While certain exchanges allow users to trade U.S. dollars directly for cryptocurrencies, some investors choose to acquire crypto assets by exchanging stablecoins like USDC and USDT for crypto.
According to Glassnode, a company that analyzes blockchain data, the amount of stablecoins held in exchange addresses has decreased from 32 billion to 19 billion between January 2022 and June 2023. During this period, the prices of BTC and ETH have dropped by 45 percent and 50 percent respectively. If the balance of stablecoins on exchanges starts increasing for the rest of 2023, it could suggest a rise in buyer demand.
Courtesy: Glassnode
On-chain data provider Santiment adds that users can expect higher than-usual volatility going ahead. It noted:
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Trading volume has really taken off market-wide after the Monday dip immediately created renewed interest in both dip buys and panic sells. With #Bitcoin & #Ethereum at month-high volume levels, you can expect higher than usual volatility.
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