Traders anticipate a deeper drop for bitcoin (BTC) in the coming weeks, despite a strong equity market and favorable U.S. crypto policies, pointing to selling activity from miners and general profit taking.
Bitcoin's upper potential may be limited due to miners' cash demand, with on-chain data showing an increase in the transfer of BTC from mining pools to exchanges.
The movement of funds to an exchange is often seen as a sign of an impending sale.
Traders foresee a deeper bitcoin (BTC) price correction in the coming weeks despite a strong equity market and favorable U.S. crypto policies due to selling activity from miners and general profit-taking.
"There's a new wave of dollar strength and demand for equities. Risk asset demand is gradually diminishing, forming a sequence of declining intraday highs for bitcoin," shared Alex Kuptsikevich, FxPro senior market analyst, in a Friday email to CoinDesk.
"Bitcoin continues to test the strength of the 50-day moving average, but it doesn't find enough reason to dive lower. Such persistent testing of the lows sets the bears up for quick success with their next target at $60,000," he added.
Miners, or entities that supply extensive computing resources to keep the bitcoin network running, may be among the selling groups, some observers said.
"Bitcoin's upper potential may be limited due to miners' cash demand," shared analysts from Japanese crypto exchange bitBank in an email. "Since May, bitcoin miners' net position–BTC inflow - BTC outflow–has been gradually declining, suggesting their operation has become tight after the Bitcoin network went through halving in April."
"The increasing net BTC outflows from miners do not necessarily put pressure on the price of bitcoin. However, prices tend to stagnate," analysts added.
On-chain data cited by CryptoQuant in a Wednesday report showed an increase in the transfer of BTC from mining pools to exchanges – which reached a two-month high on June 9. Selling via professional over-the-counter desks also spiked to the largest daily volume since late March, the firm said.
#Bitcoin hashrate's 18-month upward trend has broken, suggesting some miners are capitulating.h/t @jjcmoreno pic.twitter.com/JOyIUpAIKj
— Ki Young Ju (@ki_young_ju) June 13, 2024
Bitcoin jumped from $68,000 to $70,000 on Wednesday as May's U.S. CPI came in cooler than expected. However, the price quickly retraced the gains on Thursday after agencies at the Federal Open Market Committee (FOMC) reduced their rate cut forecast for this year from three times to only once.
Major tokens such as BNB Chain's BNB, XRP and Solana's SOL are down more than 10% since Monday, while riskier meme coins such as dogecoin (DOGE) and shiba inu (SHIB) have lost 15%.
Such moves came amid continual outflows in U.S.-listed spot BTC exchange-traded funds (ETFs), which have seen a net $500 million leave the 11 products since Monday. This marks their worst week since the end of April when they lost $1.2 billion over six days.
Bitcoin has also seemingly decoupled from the technology index Nasdaq, deviating from its usually positive correlation with this index, which is heavy on technology stocks.
Meanwhile, some market observers said that ether "looks worse" than bitcoin in terms of short-term sentiment.
"Looking at the technicals, both Bitcoin and Ethereum look bearish, but ETH looks worse than BTC," Rachel Lin, CEO and co-founder of SynFutures, said in a Telegram message. Unless ETH reclaims the $3,700 level soon, we might see more downside in the coming days and weeks.
"For BTC, $67,000 remains the crucial level," Lin said, adding the long-term outlook remains bullish in her view.
