Markets
Why is the cryptocurrency market down today? Analysis of key factors
This week, major cryptocurrencies have been on a roller coaster ride as a wave of news rocked the market. From the first days 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. One key question is on everyone’s mind: has Bitcoin begun a sustained correction or is this just a temporary bump in the road?
Read on to explore the factors behind the recent price decline and what it could mean for the future of Bitcoin.
Evaluation of the trading setup
Over the past three months, Bitcoin price has moved within two parallel trend lines on the daily charts. On June 7, Bitcoin reached resistance at $71,000 and sharply reversed its rally, falling 8.37% to $66,114.
Source-Tradingview
The initial decline was compounded by trader uncertainty ahead of the release of the consumer price index data. Even though inflation was lower than expected, the market did not recover.
According to recent data from Coinglass, Bitcoin investors have experienced significant and lengthy liquidations over the past four days. The notable green bars in the Total liquidations chart show that buyers faced a liquidation of $163.8 million, which accelerated the bearish momentum.
Miners: Are they influencing the decline?
Currently, the BTC miners capitulate it is one of the main factors contributing to falling prices. According to a recent tweet from CryptoQuant CEO Ki Young Ju, Bitcoin’s 18-month uptrend in hashrate has come to a halt, suggesting a possible capitulation by miners. This drop in hashrate suggests that miners downloading BTC will have to bear the costs of the operation after the fourth halving.
Spot ETFs see significant outflows
Furthermore, the Spot Bitcoin ETF they attended net outflows on four of the last five days of this week. On Friday, Spot ETFs recorded 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 highs, indicates renewed selling pressure after a significant rally.
On Friday, Bitcoin fell by 1.1%, breaking above the $66,730 neckline support and the slope of the 50-day EMA. The daily slope of the RSI has also fallen below the 50% midline, signaling bearish market sentiment. If this breakdown continues, sellers could push prices down another 6.5% to $61,500.
Recovery potential?
Despite the potential decline, Bitcoin remains above a healthy 23% retracement level, suggesting that 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 offers investors an opportunity to buy on the dip.
Read also: Crypto Markets Continue to Slump as Institutions Accumulate ETFs: Who’s Selling BTC?
Stay tuned to Coinpedia for further updates as the price of Bitcoin moves through these uncertain market conditions.