NOIDA (CoinChapter.com)—Bitcoin’s price could be facing several bearish signals as it struggles to maintain upward momentum. Key indicators suggest a challenging environment, with declining trading volumes and persistent profit-taking creating headwinds.
It is likely that Bitcoin’s bearish price trend could benefit other tokens, especially Ethereum.
Decline in Trading Volume and Persistent Profit-Taking
The marked decline in both on-chain and spot trading volumes is a key bearish signal for Bitcoin. Despite robust investor profitability, the volume of Bitcoin processed and transferred on the network has dropped significantly.
This decline reflects reduced investor interest and market participation, often a precursor to further price declines. Spot volume across major centralized exchanges has also decreased, indicating a waning appetite for speculation.
Moreover, lower trading volumes create a market environment characterized by boredom and apathy, making it difficult for Bitcoin to break out of its current price range.
Additionally, continuous profit-taking by investors, particularly long-term holders, presents another bearish cue. Data shows short-term holders are sending around 17.4k BTC per day to exchanges, while long-term holders contribute to the sell-side pressure at a lower rate of 1k BTC per day.
Investors are transferring more coins in profit than in loss, capitalizing on current Bitcoin price levels to realize gains. The sustained profit-taking adds to the sell-side pressure, creating overhead resistance.
The average profit per coin sent to exchanges is substantially higher than the realized losses, highlighting a profit-driven bias. However, the demand side has been insufficient to counterbalance this sell-side pressure, preventing Bitcoin from establishing a solid upward trend.
Reduced Institutional Speculation and Decline in Exchange Inflows from Long-Term Holders
Furthermore, institutional speculation has seen a notable shift. The substantial increase in open interest in the futures market, particularly at the CME Group exchange, juxtaposed with a decline in futures trade volumes, points to a move towards market-neutral strategies.
Institutional traders are focusing on cash-and-carry trades rather than directional speculation, suggesting a lack of confidence in sustained Bitcoin price movements. Such strategies indicate a bearish sentiment in the market, as institutions hedge their positions rather than betting on upward price trajectories.
Long-term holders transferred less than 0.006% of their total holdings, showing caution and reluctance to sell at current prices. The minimal activity from long-term holders adds to the overall market stagnation, reflecting a wait-and-see approach that could delay any significant price movements.
These factors, combined with the decline in trading volumes and persistent profit-taking, paint a comprehensive picture of a market facing major bearish pressures.
The reduced institutional speculation and cautious behavior of long-term holders further underscore the challenges Bitcoin price must overcome to regain upward momentum.
Bitcoin Price Facing The Spectre Of Mt. Gox
The upcoming Bitcoin sell-offs from Mt. Gox creditors and the German government also pose bearish risks for the market. Starting in July, Mt. Gox will begin repaying its users with over $9.4 billion worth of Bitcoin to approximately 127,000 creditors.
This large influx of Bitcoin could introduce substantial selling pressure, potentially driving prices down. Eric Balchunas from Bloomberg likened the impact of the sell-off to negating half of all ETF inflows in one shot.
The long-awaited repayments by Mt. Gox creditors could push Bitcoin below the critical $60,000 mark, testing the market’s resilience.
Adding to the bearish sentiment, the German government moved nearly 6,500 BTC on June 19, according to Arkham Intelligence. The wallet, holding nearly 50,000 BTC since February 2024, represents over $3 billion at current prices.
The sale of such a huge volume of Bitcoin by a government entity introduces another wave of potential sell-side pressure. The combined effect of these events could lead to a notable correction in the Bitcoin market.
Independent crypto analyst Willy Woo suggested that the market needs a 4-week cooling period to reach a state of “boring” price action, which historically precedes a bullish phase. These sell-offs could test key support levels, with predictions indicating that Bitcoin might revisit the $60,000 level.
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