CryptoQuant identifies three key factors behind the recent crypto market downturn

According to CryptoQuant, a South Korea-based on-chain data/analytics provider, three key factors are behind the recent decline in the cryptocurrency market, as noted in its analysis published on June 18, 2024. CryptoQuant identifies the first reason as being miner capitulation, stating that miner revenues fell by 55%, forcing miners to sell more Bitcoin to cover costs. The data provider notes that increased transfers of Bitcoin from miners’ wallets to exchanges often indicate that they are selling, which can depress prices.

CryptoQuant points out that the second factor is the lack of new issuance of stablecoins like USDT and USDC, which suggests that less new money is entering the crypto market, potentially reducing liquidity and increasing volatility. price.

The third reason, according to CryptoQuant, is large outflows from major spot Bitcoin ETFs, such as those from Fidelity and Grayscale, creating selling pressure on Bitcoin, with Fidelity seeing an outflow of over 1,384 BTC on June 17 alone .

CryptoQuant observes that the combination of these factors has sparked fears among short-term investors, defined as those who have held Bitcoin for less than 155 days, pushing them to sell their holdings due to fears of further price declines. Despite current market conditions, CryptoQuant highlights that the average realized price for short-term holders, around $62,400, has historically acted as a strong support level in bull markets.

Additionally, CryptoQuant notes that historical trends suggest that periods of sustained low miner revenue combined with a high hashrate can often indicate a potential market bottom, which may indicate possible market stabilization or rebound. Looking ahead, CryptoQuant concludes that while current conditions are causing fear and selling among short-term investors, the strong support level around $62,400 for the average realized price of short-term holders could help to stabilize prices in the short term. However, the data provider emphasizes that further inflows, particularly from stablecoins, and a reduction in selling pressure from miners and ETFs will be key to a sustainable recovery.

At the time of writing, Bitcoin is trading at around $65,335, down 0.5% in the last 24 hours.

Featured image via Pixabay

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