The cryptocurrency community rejoiced after the cryptocurrency winter finally ended and Bitcoin hit an all-time high of over $70,000. However, there is growing concern among holders as the price of Bitcoin has recently fallen below $65,000, suggesting the beginning of a bear market. The effects of the BTC price swing were evident, with all major altcoins falling by double-digit percentages.
The 24-hour cryptocurrency market capitalization fell 3.5%, reaching $2.6 trillion, creating a tense atmosphere. As FUD appears to be growing, we would like to examine some of the factors responsible for the market decline.
Bitcoin ETF leak
Over the past few days, major ETFs such as Fidelity, ARK, and Grayscale have seen massive withdrawals of over $145 million, putting selling pressure on Bitcoin. The huge amount showed uncertainty among investors amid market volatility.
Observing on-chain data spots, total net inflows fell below $15 billion over the 109-day trading period. The Fidelity Wise Origin Bitcoin Fund reported the largest outflow of nearly $91 million. However, investors in several ETFs remained neutral, reporting net inflows of zero, but this was not enough to keep prices above $65,000.
political aspect
The United States has repeatedly shown that it is not accepting of decentralized cryptocurrencies with strict laws and unclear regulations. US Federal Reserve (FED) Chairman Jerome Powell’s recent speech hinting at limited interest rate hikes in 2024 has prompted investors to reconsider investing in cryptocurrencies.
French connections also added to uncertainty as French President Emmanuel Macron called for early elections, urging traders to move to the greenback, which pushed the dollar higher. It is interesting to note that Bitcoin is inversely related to USD. The dollar’s sudden strength could also be a contributing factor.
Also Read: Bitcoin Mining Could Trigger a Bull Market in BTC
mining elements
Miners are the lifeblood of the BTC blockchain, and the results of their activities always impact the price. BTC miners experienced a nearly 8% drop in profits due to the price drop. The hash price, i.e. the revenue generated from 1 petahash per second (PH/s), decreased from $57.36 per PH to $52.53 PH.
After mining rewards were reduced following the recent Bitcoin halving, miners were put under further pressure due to falling hash prices. To make up for the deficit caused by reduced revenue, miners sold Bitcoin to cover their overall costs.
Ethereum ETF Riddle
Despite receiving approval from the SEC, the Ethereum ETF has not received approval, which leaves some uncertainty for altcoins. The SEC is strictly monitoring ETH ETF applications and has issued several rejections citing compliance deficiencies.
The delays have left investors in a flurry of emotions, from confusion to fears of market instability. The market is expected to gain positive momentum with the approval of ETF listing.
What to expect?
As of press time, the price of Bitcoin is $64,565, but trading volume is up 63% to $39.1 billion. The increase in trading volume shows increased activity in Bitcoin, with sellers and buyers being very active around the $65,000 level.
There is a lot of uncertainty in the market due to regulations, geopolitics and volatile market sentiment, making the future uncertain. After BTC broke the key support level of $65,000, bulls are expecting a slight correction and a rise to levels above $70,000, but bears could push the price below $60,000.
Also Read: Bitcoin Falls to One-Month Low, But Bulls Still Have Hopes for a Rebound.