The price of Bitcoin suddenly plummeted recently, falling below $62,607, hitting a new low this month. This price turmoil has attracted widespread attention. What exactly caused the Bitcoin price to fall so sharply? Where will Bitcoin go in the future? Next, we will analyze the reasons for the recent plunge in depth.
1. Reasons for the sharp drop in Bitcoin prices
Miner Selling Pressure: One notable reason for Bitcoin’s recent price decline is the massive selling by miners. Since early June 2024, miners have dumped more than 30,000 BTC, with a total value of up to approximately $2 billion. These selling actions were mainly concentrated on exchanges, thus increasing the selling pressure in the market and further depressing the price of Bitcoin.
Fed liquidity reversal: Bitcoin's price is closely tied to the Fed's liquidity policy. In the past two weeks, the Fed's liquidity measures have turned negative, and this change has directly affected Bitcoin's price trend. Normally, when the Fed reduces market liquidity, it will have an adverse impact on high-risk assets such as Bitcoin.
Lack of new capital inflows: Another important factor contributing to the price drop is the continued outflow of funds from Bitcoin ETFs observed recently. This lack of new investment has exacerbated the selling pressure in the market, further weakening Bitcoin's price support.
IFP indicator declines: The Inter-Exchange Flow Pulse (IFP) indicator, which tracks the flow of Bitcoin from spot exchanges to derivatives exchanges, has recently shown a downward trend. This change indicates that the bearish sentiment in the market is strengthening, bringing greater downward pressure on Bitcoin prices.
II. Historical Trends and Future Prospects
Historically, June is often the month when Bitcoin prices fall to their lows for the year. This pattern has occurred repeatedly in recent years: for example, Bitcoin fell to $9,000 in June 2020; to $29,500 in June 2021; to $19,000 in June 2022; and in June 2023, Bitcoin hit a low of $24,700. Based on this historical trend, Bitcoin may stabilize in the $59,000 to $60,000 range this month, which may indicate that the market is about to rebound.
3. Market Dynamics Analysis
In early June 2024, the price of Bitcoin once stabilized at around $67,713. However, on June 5, after the price of Bitcoin quickly climbed to a high of more than $71,103, it began to fall. It can be clearly seen from the daily chart of BTC/USD that this decline was accompanied by the alternation of many striking red large black candles and a few green small white candles. In the past 30 days, Bitcoin has fallen by 8.8% overall; in the past week, it has fallen by 5.2%; in the past 24 hours alone, it has fallen by 2.6%.
In summary, the recent price drop of Bitcoin is mainly attributed to the massive selling of miners, the adjustment of the Fed's liquidity policy, the continuous outflow of funds from Bitcoin ETFs, and the overall bearish market sentiment reflected by the IFP indicator. Although the current market is facing considerable challenges, historical data also suggests that June may be a critical period for Bitcoin to bottom out before a potential recovery.
Faced with the current market conditions, do you choose to buy on dips, hold on firmly, or sell decisively?
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