On December 30, 2024, the cryptocurrency market was hit by a major decline 📉. Several key factors explain this sudden and widespread drop. Here’s an overview 🧐:
🌍 1. Impact of new European regulations
The European Union has implemented its new MiCA (Markets in Crypto-Assets) regulations 🏛️. These rules impose strict constraints on stablecoin issuers, such as:
Mandatory obtaining of an electronic money license 📜.
The need to maintain significant financial reserves 💰.
Tether Limited, the issuer of USDT, did not obtain this license ❌. As a result, USDT was removed from regulated platforms in Europe, causing a liquidity collapse and market panic. 💥
📊 2. An overbought market
Technical indicators, such as the Relative Strength Index (RSI), showed that Bitcoin was in an overbought phase 📈. This prompted many investors to sell for profits 💸, leading to a wave of massive selling that worsened the fall.
⚡ 3. Massive liquidations
On December 9, 2024, another event contributed to this bearish trend: massive liquidations in the futures markets 🚨. When Bitcoin fell to $94,150 that day, over $1.7 billion was liquidated 💔. These liquidations amplified volatility and fueled the price decline.
💡: A perfect storm
Between the impact of new regulations 🏛️, profit-taking 🏦 and liquidations on futures markets ⚡, the cryptocurrency market has had a rough day. It remains to be seen whether industry players can adapt and turn things around 🚀.
In the meantime, investors should be cautious. The market remains unpredictable, but for some, these declines can also represent a long-term opportunity 🌟.
