TLDR:
- Bitcoin price has dropped over 10% in the past two weeks, falling below $58,000
- Spot Bitcoin ETFs experienced significant outflows, with $287 million withdrawn on Tuesday
- Miner profitability is nearing all-time lows, raising concerns of potential sell-offs
- Macroeconomic factors, including recession fears and anticipation of Fed policy changes, are influencing Bitcoin’s price
- Technical analysis suggests Bitcoin could test support at $55,000 if it fails to rise above $58,000
Bitcoin’s price has been on a downward trend, losing more than 10% in the past two weeks and struggling to maintain support above $57,000.
This decline comes despite relative strength in traditional markets, with the S&P 500 near all-time highs and gold prices close to historical peaks. Several factors are contributing to Bitcoin’s current price weakness, including significant outflows from spot Bitcoin ETFs, declining miner profitability, and broader macroeconomic concerns.
One of the primary drivers of recent selling pressure has been the substantial outflows from spot Bitcoin ETFs. On Tuesday, more than $287 million was withdrawn from the 11 US-listed Bitcoin ETFs, marking the largest single-day outflow in four months.
The selling continued into Wednesday with an additional $37 million in net outflows. Fidelity’s FBTC fund saw the largest withdrawals, with investors offloading over $162 million.
This trend indicates waning investor interest in these relatively new investment vehicles, which now manage approximately $52.6 billion in assets, down $10 billion from their peak.
Adding to the bearish sentiment is the declining profitability of Bitcoin mining operations. The miner profitability index has dropped to $42 per PH per day, down from $48 per PH per day two months ago.
This metric, influenced by factors such as network difficulty, Bitcoin’s price, and transaction fees, is nearing all-time lows. Traders fear that miners, who currently hold over 1.8 million BTC, may be forced to liquidate their holdings to cover maintenance costs and meet debt obligations.
Macroeconomic factors are also playing a role in Bitcoin’s price action. Recession concerns in the United States have influenced the cryptocurrency market, although this trend appears to be stabilizing as focus shifts to monetary policy and the US dollar’s performance.
Traders are anticipating potential changes in Federal Reserve policy, with the CME FedWatch tool showing a 59% likelihood of a 25 basis point rate cut in September and a 41% chance of a 50 basis point cut.
From a technical analysis perspective, Bitcoin is showing bearish signs. The price is trading below $57,500 and the 100-hour Simple Moving Average. If Bitcoin fails to rise above the $58,000 resistance zone, it could face further downside pressure. The next major support levels are near $56,350 and $55,500, with a potential drop to $53,500 if selling pressure intensifies.
Despite these challenges, some analysts see potential for a bullish narrative if expectations of looser Federal Reserve policy, such as lowering interest rates, gain traction.
A lower interest rate environment could make traditional financial assets less attractive, potentially driving investors to seek higher returns in risk assets like Bitcoin.
