Markets
Why is the crypto market down today? Analyze key factors
This week, major cryptocurrencies have been on a roller coaster ride as a wave of news sent a shockwave through the market. From the start of the week US CPI and PPI data, negative inflows into spot ETFs and the capitulation of Bitcoin miners, investors are scrambling to make sense of it all. A key question is on everyone’s minds: Has Bitcoin entered a prolonged correction, or is this just a temporary bump in the road?
Read on to explore the factors behind the recent price drop and what it could mean for the future of Bitcoin.
Trading setup evaluation
Over the past three months, the price of Bitcoin has moved along two parallel trendlines on the daily charts. On June 7, Bitcoin hit resistance at $71,000 and reversed sharply, falling 8.37% to $66,114.
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The initial decline was compounded by trader uncertainty ahead of the CPI data release. Even though inflation was lower than expected, the market did not recover.
According to recent data from Coinglass, Bitcoin investors have experienced a notable long sell-off over the past four days. The notable green bars in the Table of total liquidations show that buyers faced a $163.8 million liquidation, which accelerated the downside momentum.
Miners – do they have an impact on the decline?
Currently, the Capitulation of BTC miners is one of the main factors contributing to the drop in prices. According to a recent tweet from CryptoQuant CEO Ki Young Ju, Bitcoin’s 18-month hashrate uptrend has come to a halt, hinting at a possible miner capitulation. This drop in hashrate suggests that miners are abandoning BTC to bear operating costs after the fourth halving.
Spot ETFs See Significant Outflows
Additionally, the spot Bitcoin ETFs to have witnessed net outflows in four of the last five days of the week. Spot ETFs saw a substantial outflow of $190 million on Friday, indicating a cautious approach by investors amid the current correction.
Analyzing the daily chart, Bitcoin formed a bearish double top pattern at the resistance level of $71,000. This trend, often seen at market tops, indicates renewed selling pressure after a significant rally.
On Friday, Bitcoin fell 1.1%, breaking above the $66,730 support and the 50-day EMA slope. The daily RSI slope has also fallen below the 50% midline, signaling bearish market sentiment. If this situation continues, sellers could push prices down another 6.5% to $61,500.
Recovery potential?
Despite the potential slowdown, Bitcoin remains above a healthy 23% retracement level, suggesting buyers still have a strong hold on the asset.
Bitcoin’s current price is just 10% below its all-time high of $73,750. Historically, a 20-30% decline is normal for this volatile asset, allowing it to recover and maintain bullish momentum. The overall trend remains positive and the current correction provides investors with opportunities to buy the dip.
Read also: Crypto Markets Continue to Fall as Institutions Hoard ETFs: Who is Selling BTC?
Stay tuned to Coinpedia for further updates as the Bitcoin price moves in these uncertain market conditions.