Top Reasons Why The Crypto Market Is Dropping Today

Crypto Market News: In the world of cryptocurrencies, today’s market downturn has left many investors and enthusiasts seeking answers. The broader cryptocurrency market was dragged down on Tuesday due to the drop in Bitcoin’s price which occurred in the context of heightened regulatory uncertainty and other vital factors.

Growing Concerns Over Debt Ceiling

The possibility of the United States defaulting on its debt is currently higher than it has ever been, which poses a threat to sending financial markets across the globe into uncharted territories.

In case, the United States defaults on its debt, there is a considerable possibility that the United States Treasury will run out of funds — which will limit liquidity to some extent — and adversely affect Bitcoin as well. Considering the cryptocurrency market is still heavily correlated with the US stock market, the value of cryptocurrencies is likely to stay volatile if the situation worsens.

Read More: Billions in SHIB Sent to Dead Wallets as Burn Rate Jumps 26,000%

Massive ETH Staking Redemption

The largest Ethereum staking DeFi protocol Lido, opened up redemptions for its stETH (staked ETH) token on May 16. This resulted in $500,000 worth of Ether being exchanged in under three hours. It is anticipated that this amount will dramatically increase, especially when major entities and firms that have staked with Lido begin processing their withdrawals.

Moreover, concurrent with the ongoing Ethereum withdrawals, bankrupt crypto lender Celsius was seen transferring significant amounts of cryptocurrency. Celsius locomoted close to 428K stETH, which was valued at around $781 million at the time of transfer.

Brewing Regulatory Uncertainty

The crypto sector fell a day after the SEC’s legal team responded to Coinbase’s complaint seeking clarification on which tokens qualify as securities, labeling the lawsuit as “baseless.” Recent court records reveal that the SEC suggested that it is under no obligation to provide Coinbase’s requests presented in the petition and contended that the agency would stick to the regulations they are currently following.

This led to the widespread belief that the SEC is still a long way off from establishing a decisive crypto legal framework, in contrast to the MiCA law, which was just given the go-ahead by the EU Council today.

As things currently stand, the price of Bitcoin is exchanging hands at $27,018 which represents a drop of 1.42% over the past 24 hours in comparison to Ethereum’s which is presently hovering over the $1800 price range, recording a loss of 0.58% within similar time frame.

Also Read: World’s Biggest Investor Paul Tudor Jones Warns Against Buying Bitcoin Now