Crypto Scoop: Crypto Fear and Greed Index Shifts Toward Fear Amid Temporary Price Dip

Despite the recent price fluctuations, stakeholders maintain optimistic forecasts, with investors seizing the opportunity to buy the dip. In this edition of the Crypto Scoop, we review the following:

• Price moves of top cryptocurrencies
• Tether dominates trading volumes
• Global crypto initiatives and regulation and more.

Price Moves of Top Cryptocurrencies

This week, the cryptocurrency market recorded notable price fluctuations. Bitcoin saw a noteworthy dip to $54,000 before a swift rebound to $57,000, while Ethereum dropped to $2,800 before recovering to $3,000. Adding to the market's uncertainty, the Crypto Fear & Greed Index, a measure of investor sentiment, plummeted to its lowest level since January 2023, registering a score of 27 on July 9. This downturn in sentiment was primarily driven by the Mt. Gox repayment process and the German government's substantial transfer of around $900 million worth of Bitcoin, both of which intensified selling pressures and rattled the market.

Recent analysis from the cryptocurrency analytics firm Santiment shows contrasting behaviours among Bitcoin investors. Possibly driven by fear, small traders have been rapidly selling off their holdings, contributing to current market pressures. Meanwhile, more prominent investors, including whales (holding 1,000 BTC or more) and sharks (holding between 10 to 1,000 BTC), are increasing their stakes by buying the dip. Notably, over 261 wallets now hold at least 10 BTC, a clear indication of growing confidence among these larger stakeholders. Despite the recent deep market corrections, this trend suggests a strong belief in Bitcoin's long-term potential and a bullish outlook.

JPMorgan anticipates a recovery in the cryptocurrency market starting August 2024, driven by stabilised interest rates and improved investor sentiment. JPMorgan notes that similar market corrections have historically led to substantial rebounds. Additionally, independent analyst Arsen predicts Bitcoin will reach $330,000 in this bull cycle. This prediction is based on institutional investors capitalising on the current dip below $60,000, indicating a robust long-term bullish outlook. Arsen emphasises that this pattern reflects Bitcoin's recurring four-year cycles of explosive growth, suggesting that the recent drop is a typical phase in its volatile trajectory.

Tether Dominates Trading Volumes, Surpassing Major Cryptocurrencies in 2024

This week, Tether (USDT) has emerged as the most traded cryptocurrency, surpassing the combined 24-hour trading volumes of top digital assets, including Bitcoin, Ethereum, USD Coin, Solana, and First Digital USD. As of 2024, Tether's trading volume peaked at $130 billion, demonstrating its crucial role in providing market liquidity. This was highlighted by a recent CryptoSlate report, which noted Tether's volume soared to over $55 billion in a single day, outstripping Bitcoin's $28 billion and Ethereum's $15 billion. With a stable market cap of over $112 billion, Tether's consistent performance through the year cements its position as a preferred vehicle for traders to hedge against market volatility.

Meanwhile, Matthew Sigel, Head of Digital Assets Research at VanEck, forecasts that the crypto market could benefit from an influx of approximately $6 trillion over the next 20 years due to inheritances. This projection is based on a 2024 Bank of America study, which suggests that as Baby Boomers and older generations pass down wealth, a significant portion might flow into cryptocurrencies if younger heirs allocate about 14% of their inherited wealth to digital assets. This reflects a growing enthusiasm for cryptocurrencies among younger investors, potentially reshaping the investment landscape.

Recent Developments in Global Cryptocurrency Regulation and Adoption

In the first half of 2024, the landscape of cryptocurrency startups witnessed a significant shift. The proportion of new crypto startups launching in Africa and Asia reached record highs, reducing the market share previously dominated by the United States and Canada. This shift is attributed to the increasing regulatory uncertainties in North America. According to a blockchain startup accelerator Alliance report, Europe has now overtaken the US and Canada as the prime location for new cryptocurrency startups, holding a 31.4% share. Asia followed closely with a 26.8% share, while Africa's share rose to 5.2%.

Meanwhile,  the Bank of Italy is set to release guidelines for the application of the upcoming European Union crypto regulations. Governor Fabio Panetta announced on July 9 that these guidelines aim to facilitate the effective application of the EU’s Markets in Crypto-Assets Regulation (MiCA) and enhance protection for cryptocurrency holders. Panetta highlighted that MiCA identifies two primary categories of tokens suitable for payments: asset-reference tokens (ARTs) and electronic money tokens (EMTs). However, the Bank of Italy has determined that only EMTs, which are linked to a single official currency like a US dollar-backed stablecoin, can fully fulfil the payment function while maintaining public trust, unlike ARTs, which are backed by one or more assets.

Former US President Donald Trump is set to headline the 2024 Bitcoin Conference in Nashville, Tennessee, marking his first public address to the global Bitcoin community. Scheduled to speak on July 27 at 2 PM on the main stage, his speech will be live-streamed worldwide. This appearance is notable as it comes five years after Trump's initial criticism of Bitcoin and cryptocurrencies, which he said were "not money" and could facilitate illegal activities. Observers are keen to hear Trump’s current views on the crypto industry, especially given his more recent shift towards supporting it. This speech is anticipated to offer insights into his perspectives on crypto regulation and the industry's future growth.