Bitcoin (BTC) Price Prediction: What\'s Behind the Recent Downturn and Where Is the Market Headed?

The crypto market has witnessed a significant downturn, with the global market cap tumbling from over $2.8 trillion to just below $2.5 trillion in a matter of weeks.

The crypto market has taken a hit in recent weeks, with the global market cap dropping from over $2.8 trillion to just below $2.5 trillion. This decline has affected major cryptocurrencies like Bitcoin [BTC], which has seen a 7.9% drop in the past fortnight alone.

Now, a recent analysis by a CryptoQuant analyst has shed light on several factors contributing to the current market conditions.

A closer look at Bitcoin revealed that it has not only dropped by nearly 8% over the last two weeks but has also continued to struggle in the last 24 hours, shedding an additional 0.1% to trade at around $65,524.

What is behind this recent downturn?

One of the primary factors the analyst cited for the recent market decline is miner capitulation. The last time a miner capitulation event occurred was back in December 2020, during the last Bitcoin bear market cycle.

The CryptoQuant analyst points out a significant drop in miner revenues—by as much as 55%—has forced miners to offload Bitcoin to cover operational costs. This increase in Bitcoin moving from miners’ wallets to exchanges often precedes a price drop, as the market absorbs the added selling pressure.

Additionally, the lack of new issuances of major stablecoins such as USDT and USDC has contributed to reduced liquidity in the market. Normally, new issuances signify fresh capital entering the market, bolstering trading volumes and supporting price levels.

However, with stablecoin issuances stalling, there’s less new money to counteract selling pressures, leading to increased volatility and price declines.

Another significant pressure point comes from the outflows observed in major cryptocurrency exchange-traded funds (ETFs). Notable withdrawals, such as the over 1,384 BTC pulled from Fidelity on the 17th of June, exemplify the selling pressures that weigh heavily on Bitcoin prices.

These withdrawals reflect a broader sentiment of caution among crypto investors, particularly in response to the uncertain macroeconomic landscape.

The selling behavior is not isolated to institutional investors; it extends to short-term holders as well. The Spent Output Profit Ratio (SOPR) for this group has not reached the highs typical of market peaks, suggesting that we are not at a cycle top yet. Instead, we’re seeing a market still dominated by long-term holders, providing a strong support level that could temper a further crypto drop.

Looking ahead

Despite the current downturn, there are indicators that the market might be nearing a bottom.

Another CryptoQuant analyst, Julio Monero, highlighted on the X (formerly Twitter) platform that Bitcoin has fallen below key short-term support levels, potentially indicating a further drop to around $60,000.

Factors such as subdued activity from traders and large investors, coupled with limited liquidity from stablecoins and diminished U.S. investor interest, are currently dampening crypto market dynamics.

Further examination using IntoTheBlock’s data revealed a notable uptick in Bitcoin transactions exceeding $100,000, signaling increased activity from large-scale investors, which could foreshadow a shift in market momentum.

Prominent crypto analyst Ali, analyzing Bitcoin’s historical price trends, suggested that if the current market cycle follows previous patterns, we might not see a peak until late 2024 or 2025.

This analysis was shared alongside a chart illustrating Bitcoin’s performance from its most recent cycle low. Meanwhile, according to AMBCrypto’s recent report, regardless of all these downturns, we are still in a crypto bull market.

News source：https://www.kdj.com/cryptocurrencies-news/articles/bitcoin-btc-price-prediction-downturn-market-headed.html

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