Key Points
- Bitcoin (BTC) price dips below $60K, leading to a bearish trend and altcoin capitulation.
- Factors such as low investor optimism, institutional cash outflows, and Federal Reserve policies contribute to the price drop.
Bitcoin’s (BTC) price has been on a downward trend, falling below the $60K mark. This has occurred in the past 24 hours, with the leading cryptocurrency losing about 4% to trade at approximately $58,453 during the early European session on Thursday.
The drop has resulted in significant losses in the crypto leveraged markets. Over $275 million has been lost, with about $245 million involving long traders.
Why is Bitcoin’s Price Dropping?
The price of Bitcoin has been influenced by bearish sentiments over the past month. This is largely due to low optimism from whale and institutional investors. The crypto industry is also anticipating the distribution of Bitcoins worth $9 billion from Mt.Gox, a move that many analysts believe could negatively impact the industry.
A crypto whale, believed to be an institutional investor, has also deposited more than 3,500 Bitcoins to Binance crypto exchange on Thursday. The demand for Bitcoin below the $60K level is expected to remain weak as more investors wait for the markets to cool down.
Bitcoin’s price has also been affected by significant cash outflows from spot BTC ETFs. The US spot Bitcoin ETFs registered a net cash outflow of about $20 million on Wednesday, led by Grayscale’s GBTC. Only Fidelity’s FBTC registered a positive cash flow of about $7 million.
The bearish trend was further fueled by Federal Reserve officials’ indications that inflation is cooling down slowly, thus not guaranteeing interest rate cuts. The continued attacks on Web3 firms by the US SEC amid the anticipated listing of spot Ether ETFs have also negatively affected bullish sentiments.
Future of Bitcoin’s Price
Despite the current bearish trend, Bitcoin has been in a re-accumulation zone following the halving and spot BTC ETF hype that attracted new customers. However, more than 16 percent of Bitcoin holders were left in loss positions after the BTC price dropped below the crucial $60K support level.
This could lead to more bearish pressure, pushing BTC price towards the next significant demand zone between $40K and $50K. However, on-chain data analysis provided by CryptoQuant indicates that a Bitcoin price rebound could be on the horizon. The firm noted that Bitcoin miner capitulation levels are around the end of 2022 during the FTX debacle. If Bitcoin price does not rebound in the next two weeks, further crypto capitulation could occur in the coming months before an eventual parabolic rally.
