Institutional spot Bitcoin ETF outflows and lowered Bitcoin miner profitability could be driving the current price drop
Bitcoin (BTC) gained 4.3% between Aug. 16 and Aug. 18 but reversed this gain after failing to sustain levels above $60,000. The price corrected to $58,500 while the S&P 500 index futures and gold approached their all-time highs on Aug. 19. This suggests that the movement was exclusively related to cryptocurrencies. However, attributing Bitcoin's recent weakness to a single event would be premature, as its price has struggled to close above $63,000 throughout August.
Some analysts suggest that the unwinding of carry trades in Japan, driven by rising interest rates, is a primary factor behind Bitcoin's recent weakness. Other contributing factors may include global recession risks and Bitcoin miners' profitability. It is crucial to assess whether these factors continue to suppress Bitcoin's price to determine how long the $63,000 resistance level will hold.
Renaissance Macro Research notes that the strengthening of the Japanese Yen since mid-July has contributed to weakness in Bitcoin and cyclical stocks, which are heavily reliant on debt leverage. The Japanese currency appreciated by 12% against the US dollar from July 10 to Aug. 5, causing market turbulence. However, this issue appears to have stabilized after Japan's GDP grew at an annualized rate of 3.1% in the second quarter.
