Why Bitcoin Price is Plummeting: Analysts Break Down 4 Reasons, Predict Future Rise
Bitcoin (BTC) has been struggling to maintain its upward momentum since hitting $70,000 earlier in June. Despite reaching this milestone just a couple of weeks ago, the price of Bitcoin has been on a downward trend, hovering around levels seen three months ago. This nearly 7% decline is not attributed to a single event but rather a combination of factors.
Analysts point to the stagnation of 11 spot Bitcoin exchange-traded funds (ETFs) as one reason for the lackluster performance. Interest in these ETFs surged in January following approval by the SEC, with a total value of over $53 billion. However, most of the inflows occurred in the initial months of operation, with net outflows reaching $580.6 million just last week.
Another factor impacting Bitcoin’s growth is the challenging mining conditions. The anticipation surrounding the April 19 halving, which reduced the supply of newly issued coins by 50%, led to a surge in Bitcoin’s price. However, mining difficulty has posed challenges, with hashrate fluctuating and miners struggling to maintain profitability.
Matthew Sigel, director of digital assets research at VanEck, sees this post-halving instability as typical, predicting a consolidation phase before a significant price increase around the US elections in November. Despite recent price corrections, Sigel remains bullish on Bitcoin’s long-term prospects.
David Lawant, research manager at FalconX, attributes the recent price drop to weak liquidity and macroeconomic uncertainties. With Bitcoin’s average daily trading volume down in both spot and futures markets, investors are cautious amidst uncertainty surrounding US monetary policy and upcoming elections.
As market participants await the next price catalyst, the future of Bitcoin remains uncertain. The balancing act between high interest rates and cooling inflation adds to the complexity of the situation. While the market navigates these challenges, investors are advised to stay informed and exercise caution in their investment decisions.
*Please note that this is not investment advice.
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