Market Wrap: Cryptocurrencies Rise Despite Binance UK Warning

Cryptocurrencies were mostly higher Monday despite regulatory crackdowns in the U.K. and China. Bitcoin was trading at around $34,000 at press time and is up 4% over the past 24 hours.

On Saturday, the Financial Conduct Authority, the U.K’s financial regulator, warned that Binance Markets Ltd., an affiliate of Binance, is not allowed to undertake any regulated activities without prior written approval. The announcement preceded a nearly 13% drop in bitcoin over the weekend, although buyers were quick to defend support at the $30,000 level.

Bitcoin is down about 40% since April, on track for the largest two-month price drop since November 2018.

Latest prices

Cryptocurrencies:

• Bitcoin BTC$87,358.87 $34409.44 +4.64%
• Ether ETH$2,966.09 $2110.96, +15.66%

Traditional markets:

• S&P 500: 4291.8, +0.26%
• Gold: $1778.36, +0.38%
• 10-year Treasury yield closed at 1.472%, compared with 1.53% on Friday

“To be clear, Binance has not been banned from the U.K,” wrote Mati Greenspan, CEO of Quantum Economics, in a newsletter published on Monday. “This in no way indicates a policy shift from the U.K. regulators regarding crypto assets.”

Other analysts point to improving technicals as bullish.

Last week’s close on the weekly price chart provided a “bullish signal indicating possible trend reversal,” wrote Alexandra Clark, a trader at U.K. digital asset broker GlobalBlock.

Bear market drawdown

Bitcoin’s "drawdown," or the percentage decline from peak to trough, is currently around 45%, according to data provided by Koyfin. The previous bear market in 2018 reached a drawdown of 80% and took about two years to fully recover.

Typically, bitcoin suffers sharp but quick drawdowns prior to a bear market similar to 2017 and earlier this year. Eventually, sellers gain control as price shifts from an uptrend to a downtrend.

For now, some analysts expect bitcoin to remain in a range of between $30,000 and $40,000. “We expect BTC consolidation to continue for next few weeks until a decisive move takes place,” Pankaj Balani, CEO of Delta Exchange, wrote in an email to CoinDesk.

“If the global macro environment deteriorates on account of decreasing pace of global liquidity, it’s expected BTC may break the crucial level of $30K and challenge the highs of the previous cycle at $20K,” Balani wrote. “Until then, BTC is likely to be in this range and can set up a classic bull trap above $42K.”

Bitcoin miner revenue drop

Miner revenue has collapsed during the crypto sell-off and amid regulatory pressure from China. “The mining market has experienced an approximately 65.5% decline in revenues since levels sustained in March and April,” Glassnode wrote in a newsletter published on Monday.

“The 7-day average mining revenue currently sits at around $20.73M/day, which in context, is still 154% higher than it was at the time of the back-to-back halvings in 2020” the data firm wrote.

Mining difficulty adjustment

China’s crackdown on cryptocurrencies has been a blow for bitcoin mining companies and pools based in the country, with some hit harder than others. But for active miners in other parts of the world, it might be good news.

Bitcoin’s mean hash rate – a measure of the computational power working to secure the blockchain network – fell to 94 EH/s on Sunday, the lowest since May 2020, according to Glassnode. Meanwhile, the bitcoin mining difficulty could see a 25% drop at the next reset, likely on July 3, based on Glassnode’s estimates.

A downward adjustment of that size could be the largest in the Bitcoin network’s 12-year history, according to Compass Mining.

With the hash power declining and most Chinese miners going offline, the business should become easier and potentially more profitable for miners that are still active, according to Sam Doctor, chief strategy officer at BitOoda, a digital asset financial services platform.

Ethereum funds see record outflows

Net outflows from cryptocurrency funds totaled $44 million for the week ended on Friday, marking the fourth consecutive week of redemptions.

Ethereum products saw net outflows of $50 million last week, the largest on record since 2015, according to a report by CoinShares published Monday. The movement marks a reversal from the trend so far in 2021, with Ethereum-focused products having garnered a net of $943 million for the year to date as investors diversified away from bitcoin.

Altcoin roundup

• QUARLES ON STABLECOINS: Federal Reserve Vice Chairman Randal Quarles said at a bankers conference in Utah on Monday that the U.S. should find ways to say “yes” to stablecoins. The speech stood in contrast to recent comments from Fed officials, such as Federal Reserve Governor Lael Brainard, that have warned that stablecoins could pose a risk to consumers and businesses.
• SAFEDOLLAR HIT: SafeDollar, a decentralized finance (DeFi) stablecoin based on the Polygon blockchain, has been hit by a cyberattack. All activities on SafeDollar have been paused and investigations are underway, while the value of SafeDollar has dropped to $0.
• MUSK ON DOGE FEES: Elon Musk tweeted support for a proposal to reduce dogecoin’s transaction fees. DOGE’s price saw an uptick to $0.262, before it fell back to $0.255 as of press time.

Relevant news

• Huobi Reveals Countries Where It Has Halted Derivatives Trading
• China’s Longest-Running Crypto Exchange Closes Bitcoin Business Following Crackdowns
• Crypto.com Joins With Circle to Enable USD Deposits for USDC

Other Markets

Most digital assets on the CoinDesk 20 ended up higher on Monday.

Notable winners as of 21:00 UTC (4:00 p.m. ET):

aave AAVE$144.05, +21.48%

chainlink LINK$12.21 +13.47%

yearn Finance (YFI), +13.46%

Notable losers:
USD coin (USDC) - 0.02%