The story of Crypto’s June downturn

The largest crypto exchange in the world, Finance, lost $ 1.6 billion as a result of the collapse of Terra

Bitcoin survived its share of battles in June this year, losing a huge 13% only on the 18th of the month and dropping below the $20,000 mark, reaching a low of $17,593. This activity went hand in hand with a big drop in US stocks – in fact, the biggest weekly drop in the last two years – amid heightened concerns about the recession and rising interest rates in the US.

When institutions bought bitcoin, it was often done in order to balance losses in other stocks, but bitcoin “has not demonstrated that it is an uncorrelated asset,” explains Michael Purves of Tallbacken Capital.

Several firms in the blockchain business were affected, for example, Coinbase Global Inc., which was forced to lay off 18% of its staff, Gemini Trust Co. (which has reduced 10% of its staff) and Crypto.com . On June 12, Celsius Network Ltd., a major cryptocurrency lending platform, announced that it would have to stop all transfers, withdrawals and exchanges due to its inability to deliver the promised returns to customers.

These recent closures have raised concerns from analysts such as Vance Spencer of Framework Ventures about future closures across the sector, who said, “There will be a lot of companies that go bust.” Before all this, there was the death of the Terra USD stablecoin and the Luna token, which was another reason for the news that bitcoin prices had lost 30% by the 19th of the month. If you are planning to invest in cryptocurrency with iFOREX as a CFD, let's look at some more news about bitcoin and unpack the history of the cryptocurrency for June.

Binance

The largest crypto exchange in the world, Binance, lost $1.6 billion as a result of the Terra collapse. Binance actively promoted the Terra stable coin as a relatively safe way to benefit from the hype around meme coins. Binance CEO Changpeng Zhao's net worth was reduced from $96 billion to $11 billion during the recent crypto winter, and the company was also investigated by the U.S. Department of Justice and the Commodity Futures Trading Commission. The attitude of official regulators to cryptocurrencies is still under development, and, according to Bloomberg, “Regulators have already stated their desire to show an example of what they consider the worst players.” Towards the end of June, the Binance BNB token cost about $ 220, although its original price back in 2017 was only 15 cents. Binance's growth since then was initially driven by their service offering traders unregulated access to lesser-known digital tokens such as Dogecoin. Subsequently, they began offering leveraged financial products related to these coins.

Bitcoin, Ether and Blockchain

On June 22, the news of Bitcoin falling by 4.8% to $19,832 made it a worse indicator than the surrounding stocks, and Ether fell by 6.1% to $1,053, while Solana, Cardano, Dogecoin and Polkadot lost ground in the atmosphere of risk aversion prevailing at that time. “Bitcoin has reached the ‘bottom’, but probably not the 'bottom'," suggested Mark Newton of Fundstrat Global Advisors. However, the next day Bitcoin bounced by 4.7% to return to the $20,000 level, and Ether rose by 6.4%. The CEO of Binance came to the conclusion that the “cascades” recently observed in the crypto market are becoming less noticeable. However, due to the hawkish trend in Fed policy, “we can expect more volatility in the bitcoin price,” according to Bitfinex.

One important distinction should be made between the cryptocurrency market and industries using blockchain technology. In June, Mansour Al Mahmoud, CEO of the Qatar Welfare Fund, expressed his desire to “[Explore] the possibilities of blockchain. We are interested in this space, not the currency itself.” Indeed, according to Vance Spencer of Framework Ventures, the current decline in cryptocurrencies may be more short-lived than the decline of 2018-20, due to the changes achieved since then in the use of blockchain technology.

Looking into the Future

For those readers who plan to invest in cryptocurrency with iFOREX as a CFD, cryptocurrency prices will simply need to be monitored day by day, and “Bitcoin may fall below the $10,000 level this year,” suggests Jay Hatfield of Capital Management. On the other hand, some of the “crypto cheerleaders from the big rally... We are still optimistic in the long term,” says Edward Moya of OANDA. An interesting topic to keep an eye on in the future will be the potentially growing number of applications of blockchain technology in decentralized finance and the world of interchangeable tokens (NFT), as well as how this could affect bitcoin prices. At the same time, “The arguments in favor of institutions buying bitcoin are now more controversial, given that the usefulness of bitcoin has yet to be proven,” explains Michael Perves.