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- Bitcoin’s rally to $60,000 was short-lived as fear and uncertainty continued to grip the market.
- Profit-taking by short-term holders and selling behavior by miners suggests a lack of confidence in a bullish reversal.
Bitcoin (BTC) continued to experience choppy price movements after falling 2.3% to trade at $58,740 at the time of writing. The price drop also caused the market to decline feeling move from “neutral” to “fear.”
The recent surge in BTC price above $60,000 has revived market confidence as the Spent Output Profit (SPOR) ratio of short-term holders has risen above 1, according to CryptoQuant.
This confidence was short-lived, however, with the ratio having since fallen to near breakeven, indicating shrinking profit margins and the possibility of increasing selling pressure.
Source: CryptoQuant
As profit-taking behavior and fear maintain dominance over Bitcoin, will prices fall further or stagnate?
Downside risk remains high
According to a recent report, Bitcoin needs to break through a descending trendline to minimize downside risk. 10x Search.
This downtrend was evident on the daily chart, with BTC facing resistance every time it attempted a breakout.
Source: TradingView
The failure of the breakout was due to the lack of buying activity in the market, as shown by the Relative Strength Index (RSI) at 50. This measure showed neutral sentiment.
A return of buyers to the market could see BTC reclaim $60,656, which 10x Research believes will signal a strong bullish trend.
However, traders should keep an eye on the 20-day exponential moving average (EMA). Bitcoin is at risk of falling below this critical point, which could lead to further losses.
Miners capitulate
Market uncertainty is also causing Bitcoin miners to hold back, as evidenced by the drop in hash rate.
Data from BitInfoCharts showed that after the Bitcoin network hash rate reached records above 700 exhashes per second at the beginning of the month, it fell to 665 EH/s at the time of going to press.
This indicates that as miners became less profitable due to the falling BTC price, they reduced their mining activity.
CryptoQuant data also showed that over the weekend, when BTC was trading at around $60,000, miners sent 7,230 BTC to exchanges, worth over $400 million.
Source: CryptoQuant
This data suggested a capitulation of miners, which also increased the risk of BTC falling.
Do positive stories suggest tailwinds?
The Federal Open Market Committee (FOMC) is expected to announce an interest rate adjustment later this week.
A rate cut should fuel gains in risk assets like Bitcoin.
However, given that the market is already anticipating a change in Fed direction, the event may already be priced in, with the announcement triggering minimal price changes.
Read Bitcoin (BTC) Price Predictions for 2024-2025
In addition, 59% of investors anticipate a sharper decline of 50 basis points compared to the previous year. CME FedWatch Tool.
A significant decline could raise concerns about a weakening U.S. economy, prompting investors to move out of risky assets into safer ones like gold.
