Why the Crypto Market is Down Today Top Reasons and Is It a Good Time to Buy
Key Points in Recent BTC Price Decline
Recent negative market news, rejection at a resistance level, and miner capitulation have all played a role in the recent decline in BTC prices.
Breaking below crucial support levels, technical indicators are pointing towards a potential drop to $61,500.
Despite these developments, it’s important to note that large corrections are not uncommon for Bitcoin and the current price range is still considered healthy.
Market Volatility and Uncertainty
This week has been a rollercoaster for major cryptocurrencies, with a flurry of news causing shockwaves in the market. From U.S. CPI and PPI data to negative inflow in spot ETFs and Bitcoin miner capitulation, investors are trying to make sense of it all. The burning question remains: is this the beginning of a prolonged correction for Bitcoin, or just a temporary setback?
Examining the Trading Environment
Over the past three months, Bitcoin’s price has been moving within two parallel trendlines on daily charts. On June 7th, the price hit resistance at $71,000 and saw a sharp reversal, dropping by 8.37% to $66,114.
The uncertainty among traders ahead of the CPI data release further exacerbated the initial drop. Even though inflation turned out to be lower than expected, the market failed to recover.
Data from Coinglass indicates significant long liquidation among Bitcoin investors over the past four days. This has led to a bearish momentum, with buyers facing a $163.8 million liquidation.
Miner Influence on Price Decline
One of the major factors contributing to the current price decline is the capitulation of BTC miners. CryptoQuant’s CEO Ki Young Ju highlighted a halt in the 18-month uptrend in Bitcoin’s hashrate, signaling possible miner capitulation. This trend suggests that miners are selling BTC to cover operational costs post the Fourth halving.
Outflows in Spot ETFs
Spot Bitcoin ETFs have experienced net outflows in four out of the past five days this week. On Friday alone, there was a significant outflow of $190 million, indicating caution among investors amidst the ongoing correction.
Analyzing the Daily Chart
Bitcoin has formed a bearish double-top pattern at the $71,000 resistance level, typically seen at market tops, signaling renewed selling pressure after a significant rally.
The price fell below the $66,730 neckline support and the 50-day EMA slope on Friday, with the daily RSI slope dropping below the 50% midline, indicating a bearish sentiment. If this trend continues, prices could drop by another 6.5% to $61,500.
Potential for Recovery
Despite the potential downturn, Bitcoin remains above a healthy retracement level of 23%, indicating strong buyer interest. The current price is only 10% below its all-time high of $73,750. Historically, a 20-30% decline is normal for Bitcoin, allowing it to recover and maintain bullish momentum. The broader trend remains positive, offering investors opportunities to buy the dip.
In Conclusion
As the Bitcoin price navigates through uncertain market conditions, stay updated with Coinpedia for the latest updates on crypto news.