The Bitcoin (BTC) price has been under consistent selling pressure, recently falling below the critical support level of $65,000. Despite a rally in the US stock market, Bitcoin has corrected 10% from its June high of $72,000. Over the past week, BTC significantly underperformed compared to the US stock market, hitting one-month lows due to a lack of new catalysts.
In the short term, the 1-hour chart indicates a persistent downtrend, with bitcoin recording consistent lower highs and lows, recently touching $63,917. Trading volume remains low, reflecting weak momentum. If a reversal with increased volume is observed, traders may consider entering around $63,000 to $63,500, targeting an exit near the resistance level of $67,000 or higher.
Travis Kling, Founder of Ikigai Asset Management, shared his insights on Bitcoin and the broader cryptocurrency ecosystem. He noted, “Bitcoin is ~10% off of ATHs, and the timeline appears to be on the verge of cannibalism. And worse, BTC is trading pretty crappy relative to macro.”
In a series of detailed posts on X, Kling dissected the complex interplay of macroeconomic factors, ETF flows, and internal market dynamics that are shaping the cryptocurrency markets.
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Kling compared Bitcoin’s performance relative to the broader macroeconomic environment. He notes that despite the NASDAQ surging 16% since April 19, following a low induced by market trepidations about rate cuts, Bitcoin has notably underperformed, remaining relatively flat. This underperformance is particularly striking given that during this period, the US equity markets have repeatedly set new all-time highs while Bitcoin has stagnated.
Continued underperformance of Bitcoin compared to equities
The leading crypto and the broader crypto market have been trending downward as enthusiasm surrounding the Ethereum ETF approval has waned in the last few days. According to IntoTheBlock, one major factor for the sell-off is profit-taking, as the crypto market nearly doubled between Q4 2023 and Q1 2024.
Additionally, increased selling has exerted further downward pressure on BTC prices. In June alone, Bitcoin miners liquidated over 30,000 BTC worth $2 billion. The recent BTC halving has increased operational costs and reduced profits, forcing miners to sell off their BTC holdings.
The halving is believed to be a significant factor in this trend, as it has reduced miners’ profit margins and prompted them to increase their sales. Additionally, Bitcoin’s hash rate dropped by about 15% over the last month.
Further adding to the selling pressure, Bitcoin ETF outflows surpassed $500 million last week. Concurrently, the German government has been transferring substantial amounts of BTC from its holdings to exchanges, indicating potential sales. The government still holds 47,000 BTC in reserves, worth approximately $3 billion.
Potential for ongoing Bitcoin price decline
Despite the ongoing sell-off, almost 90% of BTC holders remain in profit, suggesting there is still room for more profit-taking in the market. Several market analysts predict that Bitcoin price consolidation may continue through the summer of 2024. The next significant bullish phase for BTC is expected to begin around September, with notable activity anticipated around the US elections.
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Looking ahead, a key focus for the upcoming week is the release of the Personal Consumption Expenditures (PCE) price index for May, scheduled for Friday. The decline in the core Consumer Price Index (CPI) for May indicates potential downside risks for the core PCE index. Additionally, weak retail sales may pose dangers to spending, although personal income might improve, as suggested by stronger-than-expected average hourly earnings.
Cryptopolitan Reporting by Florence Muchai
