3 Reasons Bitcoin Can’t Reclaim $64K

On June 21, Bitcoin (BTC) experienced a significant drop, falling below $64,000 for the first time in over a month. Observations from market data reveal that BTC started at $64,840 and reached a low of $63,451 within the day. The last instance of Bitcoin trading below the $64,000 mark was on May 15, after which it briefly surged to a peak of $71,980 on May 21, spurred by excitement surrounding the approval of a spot Ethereum ETF. As of the publication time, Bitcoin, the leading cryptocurrency by market cap, was valued at $63,552, marking a 3.54% decline over the past 24 hours.

The broader crypto market is also facing a downturn, with the total market capitalization falling by 3.24% to $2.33 trillion. Ether (ETH), another major player in the crypto market, saw a 2.25% decrease, bringing its value down to $3,475. It’s crucial to explore the underlying factors driving Bitcoin’s significant market correction.

One significant issue impacting Bitcoin’s price is the performance of spot Bitcoin ETFs. Investors have been exhibiting a risk-averse behavior, which is evident through the steady withdrawal of funds from these ETFs. For instance, the U.S. spot Bitcoin ETFs recorded their fifth straight day of outflows on June 19, resulting in a total weekly withdrawal of $900 million – the highest since late April. The crypto research platform SoSoValue highlights that the 11 listed ETFs collectively lost around $140 million on June 20 alone.

Among these, Grayscale’s GBTC, which was converted to an ETF earlier this year, has led with outflows amounting to $53.1 million. This was closely followed by Fidelity’s FBTC with $51.1 million in outflows. VanEck’s ETF, Invesco, and Galaxy Digital’s funds also reported net outflows, whereas BlackRock’s IBIT, which holds the most significant assets, saw a modest net inflow of $1.5 million. Other funds from various investment firms like ARK Invest and Franklin Templeton showed negligible movement.

Another contributing factor to Bitcoin’s downward trend is the declining network activity, indicating reduced demand. Glassnode data shows a significant drop in daily active addresses on the Bitcoin network, decreasing from 971,789 on April 4 to 632,620 by June 20. This 35% reduction in activity over the past 90 days reflects an apparent decrease in investor interest and network usage, compounding pressure on Bitcoin’s price.

Noted analyst Ali Martinez also shared insights on this reduced activity through a social media post, encapsulating how the downturn in exchange-related on-chain activity signals a decrease in investor interest in Bitcoin. A decline in on-chain activities generally suggests waning demand for a cryptocurrency, adversely affecting its price.

From a technical standpoint, Bitcoin’s price decline is part of a broader market correction that began after it failed to sustain above the $72,000 resistance level on June 7. Throughout this correction phase, Bitcoin has breached several crucial support levels, including the 50-day and 10-day exponential moving averages (EMAs) which stand at $66,724 and $66,594, respectively. The 200-day EMA, valued at $64,294, was the final support Bitcoin held before the recent decline.

At the current trading value, Bitcoin is breaking past the support offered by the 200-day EMA, which coincides with a 15% increase in daily trading volumes, signaling a continuation of the sell-off trend. For potential downside movements, the critical levels to observe are $60,000 and the swing low of $56,500. Investors are keenly watching these thresholds, which could indicate further depreciation in Bitcoin’s value if breached.

A combination of declining ETF performance, reduced network activity, and technical breaches of key support levels are pivotal factors driving Bitcoin’s current market correction. These factors collectively paint a picture of decreased investor interest and confidence, impacting not only Bitcoin but the broader cryptocurrency market as well.