Crypto prices have taken a hit in the past 24 hours with open finance’s leading index DeFi Pulse Index down 8.14% at the time of writing and Ether down 8.9% in that same span. Bitcoin too is down 6.1%.
The selloff comes with the backdrop of a slump in the general equities market — the S&P 500, a capitalization-weighted index which tracks the stock prices of 500 of America’s largest companies, is down 1% on the day, a significant drop for the index.
DeFi investor ceterispar1bus, as they go by on Twitter, told The Defiant that they “thinks it’s [the selloff] just macro related, lot of stuff selling off today,”
Perhaps adding to the skittish crypto market’s behavior — news has come out that two of the largest banks operating in the U.K., Santander and Barclays, are blocking users from depositing money into Binance, the top exchange in crypto in terms of daily volume. The restrictions may have cast a shadow on the crypto markets in the short term.
Additionally U.S. Senator Elizabeth Warren has penned a letter to Gary Gensler, chairman of the SEC demanding clarity on crypto regulations by July 28. Her letter included a line saying “the SEC regulates national securities exchanges, and cryptocurrency exchanges that operate in a similar manner should be subject to similar regulatory standards.” The senator’s hard language suggests that more restrictive regulations for crypto exchanges may be on the horizon.
Finally, “the US dollar has rallied back to 2021 highs” said yyctrader, The Defiant’s community lead and former full-time trader. He believes that a confirmed breakout of the dollar “would likely be a continued headwind for crypto markets and risk assets in general.
The USD and crypto tend to be inversely related as rising demand for USD is generally considered a safety trade, indicating that investors are less comfortable holding risky assets.
If the dollar turns down in this region as it has over the last year, bulls should be back in business,” yyctrader said.