Coinspeaker Bitcoin Shows Strong Divergence from Equities as BTC Price Drops Under $60,000
While the S&P 500 continues to make new all-time highs every passing day, Bitcoin has been losing crucial support levels. In the last 24 hours, Bitcoin price has tanked by 4.56% slipping under its crucial support zone of $60,000.As of press time, Bitcoin is trading at $59,892 with a market cap of $1.181 trillion. Bitcoin has continued to give sideways movement in the past couple of weeks showing a major divergence with the equities market.
On the macro front, Federal Reserve Chairman Jerome Powell made some important comments stating that the central bank has made “quite a bit” of progress on inflation. However, he added:
“We want to be more confident that inflation is moving sustainably down toward 2% before we start the process of reducing or loosening policy.”
Powell’s comments came at a central banking forum in Sintra, Portugal.
The Fed’s dovish stance appears to have influenced equity markets, as futures rose following this week’s inflation statement. Dow Jones Industrial Average futures increased by 0.073%, and S&P 500 futures edged up by 0.018% in pre-market trading.
On Tuesday’s closing, the S&P 500 was trading at 5,509.01, up by 0.6% and thereby hitting a new all-time high. Similarly, the Dow Jones Industrial Average surged by 0.4% closing at 39,331.85 while the Nasdaq composite added 0.8% to 18,028.76, exceeding its own record from the previous day.
The Commerce Department’s personal consumption expenditures price index, the Fed’s primary inflation gauge, increased by 2.6% over the past 12 months as of May. This marks a steady decline from around 4% a year ago. However, policymakers anticipate that it will not reach the Fed’s 2% target until 2026.
Bitcoin Miners to Sell More BTC
Bitcoin price is likely to face continued selling pressure coming from the Bitcoin miners amid lower network fees and reduced rewards for mining BTC, reported Kaiko Research.
According to Kaiko data, fees have dropped to an average of $3 to $5, down from approximately $45 in January. In April, a code update known as the halving reduced block rewards for transaction processing from 6.25 Bitcoin to 3.125 Bitcoin.
This reduction has put pressure on miners by decreasing revenue and making the process less profitable, while expenses such as energy, wages, and rent remain largely unchanged. Additionally, the decrease in network fees has further impacted revenue.
The report adds that during the month of May. top Bitcoin miners like Marathon Digital sold 390 Bitcoins and plans to sell even more in order to manage its operations. Thus, Kaiko noted that the risk of forced selling from Bitcoin miners will persist in the coming months.
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Bitcoin Shows Strong Divergence from Equities as BTC Price Drops Under $60,000