Crypto Market Retreats Amid Record Liquidity and Signs of Froth
Main Idea
The U.S. M2 money supply reached a record $22.02 trillion, but crypto markets continued to decline despite increased liquidity, with analysts attributing the trend to market fatigue, profit-taking, and leveraged positions.
Key Points
1. The U.S. M2 money supply rose 4.5% year-over-year in June to a record $22.02 trillion, yet crypto markets extended their decline.
2. Analysts suggest much of the liquidity is pooled in money markets and not yet converted into 'risk-on capital,' limiting its impact on crypto.
3. Crypto markets saw significant liquidations, with XRP experiencing an $89 million long liquidation in a single day, contributing to the downturn.
4. Bitcoin and major altcoins like Ethereum, Solana, and XRP saw declines of 3%, 4.8%, 6.2%, and 7.1% respectively, driven by profit-taking and leveraged positions.
5. Despite short-term volatility, analysts believe the long-term outlook for crypto remains intact, with the current downturn seen as a consolidation phase.
Description
Despite record liquidity levels, traders are pulling back as leveraged positions unwind and profit-taking accelerates across major tokens.
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