What Were the Key Factors Leading to Bitcoins BTC Price Decline to 62K Reaching a Monthly Low
Bitcoin has recently experienced a significant drop in price, falling below $62,607 and reaching a new monthly low. This decline can be attributed to several factors that provide valuable insights into the current state of the market.
One of the main reasons behind the price drop is the substantial selling pressure from miners. Since the beginning of June 2024, miners have sold more than 30,000 BTC, equivalent to approximately $2 billion. This selling activity has primarily taken place on exchanges, leading to increased selling pressure and ultimately causing Bitcoin’s price to decline.
Another factor that has influenced Bitcoin’s price is the reversal of liquidity levels controlled by the Federal Reserve (FED). Over the past two weeks, the FED’s liquidity has turned negative, directly impacting the price of Bitcoin. Typically, when the FED reduces liquidity, it has a negative effect on risk assets like Bitcoin.
In addition, there has been a lack of new investments in Bitcoin ETFs, resulting in consistent outflows. This absence of new funds entering the market has added to the selling pressure and contributed to the ongoing price decline.
Furthermore, the Inter-Exchange Flow Pulse (IFP) indicator, which measures the flow of Bitcoin from spot exchanges to derivative exchanges, has been declining. This indicates that more Bitcoin is being sent to spot exchanges, reflecting a bearish market sentiment and further driving down the price.
Interestingly, June has historically been the month where Bitcoin reaches its yearly bottom. This pattern has held true in previous years, with Bitcoin hitting lows of $9,000 in June 2020, $29,500 in June 2021, $19,000 in June 2022, and $24,7000 in June 2023. Following this trend, it is possible that Bitcoin could bottom out around $59,000 to $60,000 this month before stabilizing or beginning to recover.
Looking at Bitcoin’s recent market performance, at the beginning of June 2024, it was priced around $67,713. It briefly reached over $71,103 on June 5, but since then, it has been on a downward trajectory. This decline is evident in the daily BTC/USD chart, characterized by numerous large red candlesticks and a few small green ones. In the past 30 days, Bitcoin has experienced an 8.8% decline, with a 5.2% drop in the past week and a 2.6% decrease in the last 24 hours.
In conclusion, the recent price drop in Bitcoin can be attributed to miner selling, the reversal of FED liquidity, consistent ETF outflows, and a declining IFP indicator. Despite the current bearish sentiment, historical patterns suggest that June may once again be the month when Bitcoin reaches its bottom.