Bitcoin (BTC) has faced bearish trends in recent weeks following unsuccessful attempts to surpass its all-time high of $73,800. This has led to diminished bullish momentum across the broader crypto market.
Analysts at CryptoQuant have identified key factors contributing to BTC’s price stagnation, indicating a potential 8%-12% correction in the short term.
According to insights on CryptoQuant by on-chain data analyst “IT Tech”, the 3 major factors fueling the recent BTC market decline are miner capitulation, outflows from bitcoin exchange-traded funds (ETFs) as well as the lack of new Tether (USDT) and USD Coin (USDC) issuance.
The report showed that profits accrued by Bitcoin miners have dropped by 55% since April 2024. This huge revenue drop caused by the reduction in block rewards to 3.125 BTC courtesy of the fourth bitcoin halving has forced miners to sell more BTC to cover costs.
Related: Bitcoin Halving 2024: The Miner’s Side of the Coin
Accordingly, there has been an increased transfer of BTC to different exchanges. “More Bitcoin is being moved from miners’ wallets to exchanges, which can drive prices down, often indicating they are selling,“ the analyst wrote.
Likewise, significant withdrawals from major US-listed spot bitcoin ETFs, including BlackRock, Franklin Templeton, Fidelity and Grayscale bitcoin ETFs, have added greatly to the selling pressure on BTC, the report added. Data shows roughly $300 million have been recorded in ETF outflows this week, with Fidelity’s FBTC Fund recording an outflow of over 1,384 BTC on 17 June 2023.
It was further noted that liquidity has been low in the crypto market lately given the lack of new issuance of stablecoins such as USDT and USDC. Until funds inflow into the crypto market increases significantly, the price of BTC and altcoins would keep ranging low, IT Tech implied.
Read also: VanEck analyzes investment case for Ethereum, sets ETH 2030 price targets
Potential 8%-12% BTC price correction
Despite rebounding at the $64,000 level on Monday, CryptoQuant’s Head of Research Julio Moreno believes there is room for a further Bitcoin price correction before another attempt to break its all-time high at $73,800.
Citing BTC’s fall below $65,800, a critical short-term support level labelled as the ‘trader’s on-chain realized price, Moreno has warned investors about the possibility of the crypto asset further plummeting to $60,000. More so, he added that other factors such as low demand dynamics, low stablecoin liquidity and reduced interest from U.S. investors could contribute greatly to the potential 8%-12% bitcoin price correction.
“As the price of bitcoin has crossed this metric to the downside, bitcoin could decline towards $60,000. The bitcoin price has fallen below the trader’s on-chain realized price of $65,800, a key support level in bull markets,” he wrote in a Tuesday report.
Trading at $66,300 at press time, BTC is up about 1.6% in the past 24 hours while posting a price drop of 2.4% in the last 7 days.
