19 June 2024
Bitcoin (BTC), the largest cryptocurrency by market capitalization, experienced a significant decline on Tuesday, echoing the broader downtrend in the cryptocurrency market. Fueled by worries about the global economy and reduced summer liquidity, Bitcoin dropped below the $65,000 mark for the first time since May 16.
Notably, Ethereum (ETH) also faced a 4% loss, trading at $3,400, while other cryptocurrencies, such as XRP, Solana (SOL), and dogecoin (DOGE), suffered even bigger declines.
Market Uncertainty Persists
Marko Jurina, CEO of Jumper.Exchange, a decentralized exchange (DEX), highlighted that during economic and market uncertainty, traders often sell at a discount to minimize losses or exit riskier positions until the situation becomes clearer.
Jurina explained that the current scenario appears to be a combination of these factors, as weakening global economic conditions, unresolved geopolitical issues, and thinner market activity during the summer months contribute to heightened market volatility.
These conditions will persist for the next few months, potentially leading to parabolic movements in either direction for the Bitcoin price.
Bitcoin has grappled with the $70,000 threshold since its record high of $73,700 on March 14. Although it briefly tested this level in early June, it has since been unable to regain its bullish momentum. The cryptocurrency is currently down 4% for the month and 9% for the quarter.
Bitcoin Correction Toward $61,000?
CryptoQuant’s on-chain data suggests that traders had reduced their holdings since late May when Bitcoin touched the $70,000 level. This selling trend continues without significant buying activity.
Ki Young Ju, Founder of CryptoQuant, highlighted that Bitcoin long-term holder whales have sold $1.2 billion in the past two weeks, likely through brokers. Additionally, there have been negative net flows in ETFs, with $460 million outflows during the same period.
Young Ju contended that if this substantial sell-side liquidity is not purchased over-the-counter (OTC), brokers may deposit Bitcoin to exchanges, potentially impacting the market.
On June 14, crypto analyst Ali Martinez stressed that Bitcoin needed to break above the $66,250 level quickly to avoid a potential correction to $61,100. As the cryptocurrency struggles to regain bullish momentum, Martinez hinted at a possible drop to $61,000.
Another analyst, Rekt Capital, pointed out that Bitcoin is nearing the filling of its first Chicago Mercantile Exchange (CME) gap, with gaps at $64,000 and $62,500.
Overall, The prevailing evidence suggests that bearish sentiment has once again seized control over the future trajectory of Bitcoin’s price, signaling a challenging road ahead for the leading cryptocurrency in the market. The extent of the potential retracement and the bottoming-out point of this ongoing downtrend are yet to be determined.
At the time of writing, Bitcoin is trading at $64,770.
Featured image from DALL-E, chart from TradingView.com