According to CryptoQuant, a South Korea-based on-chain data and analytics provider, three key factors are behind the recent cryptocurrency market declines, as outlined in their analysis published on June 18, 2024. CryptoQuant identifies the first reason such as miners' capitulation, stating that miners' income has fallen by 55%, forcing them to sell more Bitcoin to cover costs. The data provider notes that increased Bitcoin transfers from miners' wallets to exchanges often indicate that they are selling, which can drive prices down.
CryptoQuant notes that the second factor is the lack of new issuance of stablecoins such as USDT and USDC, suggesting that less new money is entering the cryptocurrency market, potentially reducing liquidity and increasing price volatility.
The third reason, according to CryptoQuant, is significant outflows from major Bitcoin spot ETFs such as Fidelity and Grayscale, which create selling pressure on Bitcoin, with Fidelity experiencing an outflow of over 1,384 BTC on June 17 alone. .
CryptoQuant notes that the combination of these factors has created fear among short-term investors, defined as those who hold Bitcoin for less than 155 days, leading them to sell their holdings due to concerns about further price declines. Despite current market conditions, CryptoQuant highlights that the average realized price for short-term holders, around $62,400, has historically acted as a strong support level in bull markets.
Additionally, CryptoQuant notes that historical trends suggest that periods of sustained low mining revenue combined with a high hash rate can often indicate a potential market bottom, which may point towards a possible market stabilization or rebound. Looking ahead, CryptoQuant concludes that while current conditions are causing fear and selling among short-term investors, the strong support level around $62,400 for the average realized price of short-term holders could help stabilize prices in the short term. However, the data provider emphasizes that new inflows, especially from stablecoins, and reduced selling pressure from miners and ETFs will be critical to a sustainable recovery.
At the time of writing, Bitcoin is trading at around $65,335, down 0.5% in the last 24-hour period.
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