Why is the crypto market bearish today? Analyzing Key Factors

This week, major cryptocurrencies went through a rollercoaster ride as a wave of news sent shockwaves through the market. Since the beginning of the week US CPI and PPI data, negative inflows into spot ETFs, and Bitcoin miner capitulation, investors are struggling to make sense of it all. An important question is on everyone’s mind: has Bitcoin started 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.

Evaluating the trading setup

Over the past three months, Bitcoin price has moved within two parallel trendlines on daily charts. On June 7, Bitcoin reached resistance at $71,000 and reversed sharply, falling 8.37% to $66,114.

Source-Trading view

The initial drop was compounded by traders’ uncertainty ahead of the CPI data release. Although 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 on the Total Settlements Chart show that buyers faced a $163.8 million sell-off, which accelerated the bearish momentum.

Miners – Are they impacting the decline?

Currently, the Capitulation of BTC miners is among the main factors contributing to falling prices. According to a recent tweet from CryptoQuant CEO Ki Young Ju, the 18-month upward trend in Bitcoin hashrate has been halted, suggesting a possible capitulation by miners. This decline in hashrate suggests that miners will abandon BTC to cover operating costs after the fourth halving.

Spot ETFs See Significant Outflows

Furthermore, the spot Bitcoin ETFs have witnessed net outflows on four of the last five days this week. On Friday, spot ETFs saw a substantial outflow of $190 million, indicating a cautious approach by investors amid the current correction trend.

Analyzing the daily chart, Bitcoin has formed a bearish double top pattern at the $71,000 resistance level. This pattern, often seen at market tops, indicates renewed selling pressure following a significant rally.

On Friday, Bitcoin fell 1.1%, breaking the $66,730 neckline support and 50-day EMA slope. The daily RSI slope also fell below the 50% midline, signaling bearish sentiment in the market. If this collapse continues, sellers could reduce prices by another 6.5% to $61,500.

Recovery potential?

Despite the potential recession, Bitcoin remains above a healthy 23% retracement level, suggesting buyers still have a strong grip 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 broader trend remains positive and the current correction offers investors opportunities to buy the dip.

Read too: Crypto Markets Continue to Fall as Institutions Accumulate ETFs: Who Is Selling BTC?

Stay tuned to Coinpedia for more updates as Bitcoin price navigates these uncertain market conditions.

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