On-chain analytics platform CryptoQuant has identified three crucial factors contributing to the ongoing market slump, including Bitcoin miner capitulation.
The crypto market is grappling with severe sell-offs, erasing gains from the last bullish wave. This downturn has persisted for weeks, with Solana and Cardano each losing over 13% in their weekly performance.
The meme coin market has fared even worse, with Shiba Inu plummeting over 20% in seven days. This sharp decline has caused significant distress among market participants, driving positive sentiment toward large-cap crypto to its lowest level this year.
As bearish pressure shows no signs of abating, market participants ponder the factors behind this trend. IT Tech, a CryptoQuant analyst, recently identified three key elements that are contributing to the recent market dip based on on-chain data.
3 Reasons Behind the Recent $BTC Market Decline
“While current conditions are causing fear and selling among short-term investors, the strong support level of around $62,400 for short-term holders' average realized price could help stabilize prices in the near term.” – By… pic.twitter.com/qbPY9Z5dC0
— CryptoQuant.com (@cryptoquant_com) June 18, 2024
Bitcoin Miners Dumping Holdings to Cover Costs
Firstly, the report highlights that the market-wide collapse was influenced by developments surrounding Bitcoin, although BTC itself experienced a less severe price drop.
A major contributing factor is Bitcoin miners dumping more BTC than usual. This sell-off results from miners struggling with lower revenue, exacerbated by the latest halving cycle, which further cut profits by half.
With Bitcoin miners’ revenue declining by 55%, they have been forced to sell more of their earned BTC to cover operating costs. For instance, in an update, analyst Ali Martinez highlighted that miners offloaded 1,200 BTC, worth approximately $80 million, in a single day.
Meanwhile, pundits argue that the current miner capitulation is nearing its end, projecting a smoother uptrend for BTC in the near term.
Stablecoin Issuance Stalls
Furthermore, CryptoQuant observed a decrease in the issuance of USDT and USDC stablecoins, identifying this as another factor contributing to the downturn. The report argued that the lack of stablecoin issuance indicates an absence of new money entering the market.
Notably, tracking platform Whale Alert last called attention to a significant transfer of USDT from Tether treasury four weeks ago.
Bitcoin ETF Outflows Extend
The final factor influencing the market dip is the observed outflows from Bitcoin spot ETFs. For example, at the end of yesterday’s trading, the U.S. Bitcoin spot ETF market registered outflows worth around $146 million, marking the third consecutive trading day of negative flows.
While the negative was influenced by Fidelity and Ark Invest, other issuers like BlackRock, WisdomTree, and Valkyrie recorded zero intraday inflows on Monday.
Bitcoin Could Collapse to $62K
The report concluded that with current conditions causing fear and triggering sell-offs among short-term investors, the support level at $62,400 should be watched closely.
This level represents the average realized price for short-term holders and is expected to help stabilize prices in the near term. At press time, Bitcoin hovers around $64,925, with a 3% drop since last week.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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