Bitcoin price loses momentum due to declining miner profits and continued spot BTC outflow.

The Bitcoin (BTC) price fell 10% in the 10 days ending September 3, dropping from $64,190 to $57,800. This decline came as the S&P 500 was just 2% below its all-time high and gold was just $50 off its all-time high. Some cryptocurrency investors attribute Bitcoin’s decline to the broader macroeconomic environment, but other factors are also pushing the price below $59,000.

The macro economy is in a downtrend, but traders are sensing a change in trend.

Trader DamiDefi explains that while Bitcoin has been affected by US recession fears, this trend is stabilizing as the focus shifts to “monetary policy and the performance of the US dollar.” Looking ahead, the “bullish narrative” for Bitcoin hinges on expectations of “a looser Federal Reserve (…) such as lowering interest rates.” Essentially, traders expect the US to implement expansionary measures to stimulate the economy.

In addition to stocks and gold, traders have been accumulating U.S. government bonds, as the two-year Treasury yield has fallen from 4.06% two weeks ago to 3.88% on September 3. The trend suggests investors are willing to accept lower yields in exchange for what is considered the safest asset. Some of this uncertainty comes from the jobs market, which showed a slowdown in the unemployment rate in July, reaching 4.3%.

Meanwhile, the US central bank has eased inflation pressures as CPI slowed to 2.9% in July, the lowest reading since March 2021. On the other hand, if unemployment claims continue to rise, the chances of a total 0.75% rate cut by year-end are slim. The market currently prices a 74% chance that the FOMC rate will fall below 4.50% by December 18, leaving room for potential disappointment if macroeconomic data changes.

The next jobs report is due on September 6, and Morgan Stanley economists forecast that the U.S. economy added 185,000 jobs in August, enough to support a 0.25% rate cut from the Federal Reserve, according to Yahoo Finance. Nvidia (NVDA) reported earnings that beat market expectations, but its stock fell 6% in the next trading session, showing skepticism among traditional financial investors.

But this alone doesn’t fully explain why Bitcoin has underperformed other markets, particularly the Russell 2000 index of small U.S.-listed companies, which has been relatively flat over the past 10 days.

Spot Bitcoin ETF Fund Outflows and Declining Mining Profitability Weigh Investor Sentiment

One reason for this could be the ongoing pessimism surrounding the outflow of funds from spot Bitcoin exchange-traded funds (ETFs). The longer these products fail to attract inflows, the more negative attention they receive.

According to Farside Investors data, spot Bitcoin ETFs experienced a net outflow of $480 million between August 27 and August 30, effectively wiping out the $455 million inflows that had occurred over the previous two days. This pattern is not uncommon and does not necessarily indicate a change in investor perception of Bitcoin’s utility and value, but the headlines alone may make traders wonder if the smart money is expecting further BTC price declines.

Finally, Bitcoin investors are expressing concerns that miner profitability, which is currently near an all-time low, could trigger a selloff. Miners currently hold over 1.8 million BTC, a figure that has remained essentially flat for the past two months. These concerns have been further heightened by the recent decline in the Bitcoin hashrate index, which measures the expected revenue from a given amount of mining power (hashrate).

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According to Hashrateindex.com, the indicator has fallen from $48 per PH two months ago to $42 per PH per day. The hashrate index is influenced by factors such as network difficulty, Bitcoin price, and transaction fees, which are correlated to transaction volume. Traders are concerned that miners may have to liquidate their holdings to cover maintenance costs and meet debt obligations, which further contributes to the perceived risk in the current macroeconomic environment.