This week, major cryptocurrencies have been on a rollercoaster ride as a wave of news sent shockwaves through the market. From the early week’s U.S. CPI and PPI data, negative inflow in spot ETFs, and Bitcoin miner capitulation, investors are scrambling to make sense of it all. One key question is on everyone’s mind: has Bitcoin begun a prolonged correction, or is this just a temporary bump on the road?
Read on to explore the factors behind the recent price drop and what it might mean for the future of Bitcoin.
Evaluating the Trading Setup
For the past three months, Bitcoin’s price has moved within two parallel trendlines on daily charts. On June 7th, Bitcoin hit resistance at $71,000 and sharply reversed, falling 8.37% to $66,114.
Source-Tradingview
The initial drop was worsened by trader uncertainty ahead of the CPI data release. Even though inflation was lower than expected, the market did not recover.
As per the recent data from Coinglass, Bitcoin investors have experienced notable long liquidation over the past four days. The notable green bars in the Total Liquidations Chart show the buyers faced a $163.8 Million liquidation, which accelerated the bearish momentum.
Miners – Are They Impacting the Decline?
Currently, the BTC miners’ capitulation is among the major factors contributing to the falling prices. As per a recent tweet from CryptoQuant’s CEO Ki Young Ju, the 18-month uptrend in Bitcoin’s hashrate has come to a halt, hinting at possible miner capitulation. This decline in hashrate suggests the miners dumping BTC to bear the operation cost after the Fourth halving.
Spot ETFs See Significant Outflows
In addition, the spot Bitcoin ETFs have witnessed net outflows in four of the past five days this week. On Friday, the Spot ETFs recorded a substantial outflow of $190 million, indicating a cautious approach from 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 after a significant rally.
On Friday, Bitcoin fell 1.1%, breaching the $66,730 neckline support and the 50-day EMA slope. The daily RSI slope also dropped below the 50% midline, signaling a bearish market sentiment. If this breakdown continues, sellers could drive prices down another 6.5% to $61,500.
Potential for Recovery?
Despite the potential downturn, Bitcoin remains above a healthy retracement level of 23%, suggesting that 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.
Also Read: The Crypto Markets Continue to Drop While Institutions Accumulate ETFs: Who Is Selling BTC?
Stay tuned to Coinpedia for further updates as the Bitcoin price navigates these uncertain market conditions.
