Markets
Why is the cryptocurrency market declining today?
It hasn’t been an easy couple of days for cryptocurrency bulls. Bitcoin has recently suffered a significant decline, with its price currently sitting at $65,113 and a 24-hour trading volume of $169.865 million.
Let’s explore the key factors contributing to this downturn in the cryptocurrency market.
Key Factors Contributing to Bitcoin Recession
According to the opinion of an IT technology expert published on CryptoQuant, there are three key factors that are currently contributing to the BTC decline.
- Miners’ revenue and selling pressure: Miners’ revenues dropped by 55%, forcing miners to sell more Bitcoin to cover costs. As a result, more Bitcoin is moved from miners’ wallets to exchanges, creating downward pressure on prices.
- ETF Withdrawals and Selling Pressure: Significant withdrawals from major ETFs such as Fidelity and Grayscale are increasing selling pressure on Bitcoin.
- Stagnation of the stablecoin market: The stablecoin market does not see new issues, which leads to a reduction in liquidity in the cryptocurrency market. This lack of new money entering the market increases price volatility.
Naturally, market price volatility has prompted short-term investors to sell their holdings due to fears of future price declines.
Bitcoin Historical Trends and Support Levels: An Overview
Despite the current fears and sell-offs, the average realized price for holders of short-term securities is around $62,400, which historically serves as a strong support level in bull markets. Historical trends suggest that periods of sustained, low mining revenues combined with high hashrate may indicate a potential market bottom, suggesting a possible market stabilization or rebound.
BTCUSD: TradingView
In mid-March, the price of Bitcoin exceeded $73,000. Since then, it has fluctuated between $71,000 and $61,000, with occasional dips. It briefly fell below $60,000 in early May but quickly recovered. On June 1, 2024, BTC was priced at approximately $67,763. After three consecutive days of gains, it rose to over $71,000 on June 5, 2024. However, since then, the price of Bitcoin has gradually weakened.
The path to recovery
For a sustained recovery, new inflows, especially from stablecoins, and a reduction in selling pressure from miners and ETFs will be crucial. The strong support level around $62,400 could help stabilize Bitcoin prices in the short term.
While current market conditions are challenging, key support levels and potential new inflows could pave the way for Bitcoin’s price recovery. Investors will be following these developments closely, hoping for signs of stabilization and growth in the cryptocurrency market.
Read also: Andrew Tate: Solana price drop could lead to new all-time highs
Do you think Bitcoin will stabilize soon or are we in for a longer ride?