The crypto market has been on a rollercoaster ride this year, with prices fluctuating wildly and regulatory pressures driving major declines. However, recent developments have restored investor confidence in the market, leading to a full rally in the crypto market capitalization.
On June 15, the total crypto market capitalization bottomed out at $972 billion, following regulatory pressure from the Securities and Exchange Commission (SEC) on the industry. But since then the market has rebounded.
This rally was partly driven by the entry of major financial players into the crypto space. Several applications for a Bitcoin Spot Exchange-Traded Fund (ETF) by major financial players such as Blackrock and Fidelity have been filed, indicating that they are interested in betting on cryptocurrencies.
This helped restore investor confidence in the market, leading to increased investment and an increase in the total crypto market capitalization.
The Crypto Market Cap Moment of Truth
Cryptocurrency investors are keeping a close eye on the total crypto market capitalization as it tries to clear a significant resistance level. According For crypto analyst Rekt Capital, if the market manages to break above this level, it could pave the way for continued upward momentum and potentially big gains for the broader market.
At the time of writing, the total crypto market cap is around $1.17 trillion, with Bitcoin making up the lion’s share of that value. However, the market has been trading in a relatively tight range over the past few weeks, with many investors looking for a catalyst to push prices higher.
Rekt Capital believes that a break above the current resistance level might be just the catalyst the market needs to see a sustained uptrend. Rekt Capital suggests the market could see gains of between 10% and 23% over time if this breakout occurs.
As the chart shows, the immediate resistance levels for the global cryptocurrency industry market capitalization are currently at $1.18 and $1.25. The latter represents the highest level reached in 2023.
However, certain conditions must be met for the market to break through these levels. First, there must be an improvement in current market conditions, including a relaxation of crypto regulations by regulators globally, particularly in the United States. Additionally, there needs to be a resolution of ongoing Bitcoin Spot ETF applications by major financial players with the SEC.
If these conditions are met, it could lead to an influx of financial players and investors into cryptocurrency. Many investors are turning to cryptocurrencies as a hedge against inflation, and greater regulatory clarity and approval for a Bitcoin ETF could make the industry more attractive to traditional investors.
Cryptocurrency trading volume drops to 2020 levels
Crypto trading volumes hit their lowest levels since 2020, despite the ongoing rally in June. According According to a report from crypto market data provider Kaiko, spot trading volumes declined significantly in the second quarter, with Binance seeing the largest drop in trading activity.
Binance, one of the largest crypto exchanges in the world, saw its volumes drop nearly 70% after the exchange reintroduced fees for its most liquid Bitcoin pairs. This move, aimed at reducing market manipulation, appears to have had a significant impact on trading activity on the platform.
However, Binance was not the only exchange to see a significant drop in trading volumes. Other popular exchanges, including Coinbase, Kraken, OKX and Huobi, also saw their volumes decline by more than 50% in the second quarter.
The drop in trading volumes is surprising given the recent rally in the crypto market. Bitcoin, the largest cryptocurrency by market cap, was bullish in June, hitting a high of over $31,000. Despite this, trading volumes remained subdued, suggesting that investors are not as active in the market as they once were.
Featured image from Unsplash, chart from TradingView.com