As a researcher with a background in economics and finance, I have been closely monitoring the recent price action of Bitcoin (BTC). The sharp decline below the $61K level and the failure to maintain support above $60,000 has raised my concerns about the potential for a major correction if Bitcoin cannot hold its ultimate support level of $56,000.
The price of Bitcoin (BTC) is experiencing a significant drop, dipping below the $61,000 mark after failing to keep its position above the $60,000 support. This steep decrease has triggered alarm among analysts who fear that if Bitcoin fails to defend its crucial support level of $56,000, a substantial correction may ensue.
Bitcoin Struggles Amid Cooling PCE Data
Bitcoin’s reaction to the latest US economic data, specifically the 2.6% yearly increase in the Core Personal Consumption Expenditures (PCE) price index – the Federal Reserve’s preferred measure of inflation for May (the lowest since March 2021) – has been subdued.
As an analyst, I’ve observed that the monthly growth rate of the core Personal Consumption Expenditures (PCE) index, which measures inflation, came in at a modest 0.1% increase. This is the smallest rise since November 2023. Despite these subdued inflation readings, Bitcoin has remained relatively unaffected and persisted in trading around $60,000.
Econ Friday
PCE data expectedly came in coolerPersonal income slightly higher than expected but cooling personal spending
Pretty good reports tbh
— Skew Δ (@52kskew) June 28, 2024
Simultaneously, the cryptocurrency market has been shrouded in uncertainty due to recent actions taken by the U.S. government. Notably, a government-linked entity transferred 11.84 BTC, worth around $726,000, to a new wallet address. While this transaction may seem insignificant, it has fueled speculation of larger transactions to come. Such actions by the U.S. government can instill fear among investors, leading them to worry about possible massive sell-offs. This concern can negatively impact Bitcoin prices.
Analysts Warn of Thin Support Below $60,000
As a market analyst, I’m concerned about the potential weakening of Bitcoin’s support below the $60,000 mark. If the price cannot sustain this level, there is a risk of a significant bearish trend emerging, which could potentially push the price down to around $54,000.
As a researcher examining the data provided by CryptoQuant, I’ve identified a crucial support level for Bitcoin at $56,000. Maintaining this level is essential to prevent a potential sharp price decrease in the future.
As a crypto investor, I’ve noticed Analyst Willy Woo’s analysis of the recent price dips down to $58,000. According to him, these drops are attributed to forced selling due to leveraged positions being liquidated and selling pressure from miners. This suggests that the market hasn’t fully bounced back from the downtrend until these positions have been cleared.
Decreasing Demand, Trading Volume, and Open Interest
As a researcher studying the Bitcoin market, I’ve found that one reason for its price decline in 2024 is the decreasing demand from long-term holders and U.S. investors. Long-term Bitcoin holders have been selling off their coins at an alarming rate throughout this year. Specifically, there were notable sell-offs in May and June, with around 160,000 BTC and $10 billion worth being sold in May, and an additional 40,000 BTC leaving long-term holders’ wallets in June. This consistent decrease in holdings has been mirrored by fluctuations in Bitcoin’s market price.
The trading volume has declined by a substantial 12.84%, amounting to $39.92 billion. This reduction could be a sign of reduced market activity and waning trader interest, potentially leading to insufficient liquidity and heightened volatility.
The quantity of derivative contracts still in play, referred to as open interest, dropped by a significant 1.94%, amounting to $31.74 billion. This decrease suggests that there are fewer contracts currently being held or initiated. Contrastingly, the open interest for options has risen by 2.18% to reach $10.24 billion. It’s plausible that while the number of new option trades is diminishing, traders might be holding onto their options more tenaciously due to market instability.
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2024-06-28 21:36