The recent dip in Bitcoin’s price below $59K has intensified fears of further crypto market capitulation, despite calls from some quarters to “buy the dip.”
Continuing its bearish trend, Bitcoin (BTC) lost its crucial support level of around $60K within the last 24 hours. This led to a 4% drop, bringing its price to approximately $58,453 during Thursday’s early European trading session. This decline has resulted in significant losses, with over $275 million liquidated in leveraged crypto markets, including around $245 million from long traders.
Factors Contributing to Bitcoin’s Recent Bearish Trend
Several factors have contributed to the recent bearish sentiments surrounding Bitcoin. Notably, there has been a decline in optimism from whale and institutional investors. The anticipated release of $9 billion worth of Bitcoins from Mt. Gox has also fueled bearish sentiment, as many analysts view this as a potential market destabilizer.
On-chain data from Spot On Chain indicated that a crypto whale, likely an institutional investor, deposited over 3,500 Bitcoins to the Binance exchange on Thursday. This move has further weakened demand for Bitcoin below the $60K mark, as more investors are opting to wait until the market stabilizes before making new purchases.
According to CoinNewsNow, Bitcoin’s midterm outlook has turned bearish, partly due to significant cash outflows from spot BTC ETFs. The latest market data shows that US spot Bitcoin ETFs experienced a net cash outflow of approximately $20 million on Wednesday, primarily driven by Grayscale’s GBTC. Interestingly, only Fidelity’s FBTC reported a positive cash flow of about $7 million, with the remaining ETFs showing no cash flow activity on that day.
The overall cryptocurrency market has turned bearish following remarks from Federal Reserve officials at their June meeting, indicating that inflation is cooling down slowly, thereby not justifying any immediate interest rate cuts. Additionally, ongoing regulatory pressures from the US SEC on Web3 firms, amid the anticipated listing of spot Ether ETFs, have also dampened bullish sentiments.
Next Steps for Bitcoin Price Movement
Currently, Bitcoin’s price remains in a re-accumulation phase following the halving event and the hype surrounding spot BTC ETFs, which attracted numerous new investors. On-chain data from IntoTheBlock reveals that over 16% of Bitcoin holders are now in loss positions following the drop below the crucial $60K support level. Consequently, increased bearish pressure could drive Bitcoin’s price towards the next significant demand zone between $40K and $50K.
However, on-chain analysis from Crypto Quant suggests that a Bitcoin price rebound may be imminent. The firm highlighted that Bitcoin miner capitulation levels are currently similar to those observed at the end of 2022 during the FTX collapse. If Bitcoin does not rebound in the next two weeks, further crypto capitulation is likely in the coming months before a potential parabolic rally.
In conclusion, while the recent Bitcoin price drop below $59K has led to significant altcoin sell-offs and heightened fears of a prolonged bear market, there are indicators suggesting a possible rebound. Investors should closely monitor market developments and regulatory actions to navigate the current volatility effectively.
