Bitcoin price dropped on Tuesday as concerns over regulatory challenges and continued outflows from investment products persisted, dampening sentiment towards cryptocurrencies. The price of Bitcoin fell by 1% in the past 24 hours to $63,558.2 as of 01:52 ET (05:52 GMT).
The crypto market faced a blow this week when a report revealed that less than 10% of stablecoin transactions, which are crucial for crypto transactions, were organic or from real users. This raised doubts about the actual retail demand for cryptocurrencies, especially as stablecoin operators saw consistent growth in market capital.
Adding to the negative sentiment, trading app Robinhood Markets Inc (NASDAQ:) announced potential regulatory action from the SEC related to crypto tokens traded on its platform. The SEC also delayed a decision on ETFs, further impacting market confidence.
Outflows from crypto investment products continued for the third consecutive week, with data from CoinShares showing a total outflow of $435 million, with Bitcoin products witnessing $423 million in outflows. Grayscale’s Bitcoin ETF saw the majority of these outflows, while other Bitcoin ETFs also experienced reduced capital inflows.
The lack of immediate catalysts for the crypto market, following Bitcoin’s halving event and its subsequent rangebound trading post record highs in March, contributed to the weakening flows.
In the altcoin market, Ethereum dropped by 3.4% to $3,069.52 after the SEC postponed a decision on approving spot ETFs tracking the altcoin for U.S. markets. The SEC is now expected to make a decision in early-July and is also investigating whether Ethereum is a security, likely leading to rejection of spot Ethereum ETF applications.
Other altcoins experienced mixed movements, with speculation on U.S. interest rate cuts influencing prices. XRP rose by 0.3% while Litecoin surged by 3.8%.