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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 miner selling behavior suggested a lack of confidence in a bullish reversal.
Bitcoin [BTC] has continued with choppy price movements after dropping by 2.3% to trade at $58,740 at the time of writing. The price decline also saw market sentiment shift from “neutral” to “fear.”
The recent surge in BTC’s price above $60,000 revived market confidence as the short-term holder Spent Output Profit Ratio (SPOR) broke above 1, according to CryptoQuant.
However, this confidence was short-lived, as the ratio has since dropped to near the break-even point. This signals decreasing profit margins and the possibility of a surge in selling pressure.
Source: CryptoQuant
As profit-taking behavior and fear maintained dominance over Bitcoin, will the prices drop further or stagnate?
Downside risk remains elevated
Bitcoin needs to break above a descending trendline to minimize the downside risk, per a recent report by 10x Research.
This downtrend appeared on the one-day chart, with BTC facing resistance each time it has attempted a breakout.
Source: TradingView
The failed breakout stems from the lack of buying activity in the market, as seen in the Relative Strength Index (RSI) at 50. This metric showed a neutral sentiment.
A return of buyers in the market could see BTC retake $60,656, which 10x Research noted will signal a strong bullish trend.
Nevertheless, traders should watch out for the 20-day Exponential Moving Average (EMA). Bitcoin was at risk of falling below this critical point, which could spur further losses.
Miners are capitulating
The market uncertainty is also causing Bitcoin miners to hold back, as seen in the declining hash rate.
Data from BitInfoCharts showed that after Bitcoin’s network hash rate hit record highs above 700 exhashes per second earlier this month, it dropped to 665 EH/s at press time.
This indicated that as miners became less profitable due to declining BTC prices, they reduced mining activity.
Data from CryptoQuant also showed that over the weekend, as BTC traded at around $60,000, miners sent 7,230 BTC to exchanges, valued at over $400M.
Source: CryptoQuant
This data suggested miner capitulation, which also elevated the downside risk for BTC.
Do positive narratives suggest tailwinds?
The Federal Open Market Committee (FOMC) is expected to announce an adjustment in interest rates later this week.
A rate cut is expected to fuel gains for risk assets like Bitcoin.
However, given that the market is already anticipating the Fed to pivot, the event could already be priced in, with the announcement triggering minimal price changes.
Read Bitcoin’s [BTC] Price Prediction 2024–2025
Moreover, 59% of investors anticipate a steeper cut of 50 basis points per the CME FedWatch Tool.
A large cut could stir concerns about the weakening U.S. economy, which will prompt investors to abandon risk assets for safer assets such as gold.
