Wednesday, October 9, 2024
14.4 C
London

Bitcoin at risk of further price falls – Here’s why

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.

Previous: Russia’s crypto mining move: 15 new mining facilities to open
Next: Is Cardano just a ‘cult coin’? Analyst points to BNB as ‘superior’

Hot this week

Ethereum (ETH) Predicted To Hit A New Peak Of $6,000

Ethereum (ETH) faced a significant price correction earlier this...

Could decline in Chinese stocks redirect capital back to Bitcoin, crypto trading?

Crypto investors have reportedly shifted focus to the recent...

Scam Alert! CoinMarketCap Warns of Fake CMC Token

Cryptocurrency tracking website CoinMarketCap has issued a stern warning...

Ripple: How Long Should You Wait For XRP To Hit $3?

Ripple’s XRP token has had a rough few years....

Sectors that are Warming up to Cryptocurrency Payments

It seems as if only yesterday cryptocurrencies were nothing...

Topics

Ethereum (ETH) Predicted To Hit A New Peak Of $6,000

Ethereum (ETH) faced a significant price correction earlier this...

Could decline in Chinese stocks redirect capital back to Bitcoin, crypto trading?

Crypto investors have reportedly shifted focus to the recent...

Scam Alert! CoinMarketCap Warns of Fake CMC Token

Cryptocurrency tracking website CoinMarketCap has issued a stern warning...

Ripple: How Long Should You Wait For XRP To Hit $3?

Ripple’s XRP token has had a rough few years....

Sectors that are Warming up to Cryptocurrency Payments

It seems as if only yesterday cryptocurrencies were nothing...

86-Year-Old Lawyer to Pay $14M for Crypto Ponzi Scheme

David Kagel, an 86-year-old ex-attorney from California, has been...

Crypto Chaos: Turkey’s Discord Ban Shakes Investor Confidence

Turkey’s Discord ban has rattled the cryptocurrency community, and...

Shiba Inu: How Long Should You Wait For SHIB To Hit 5 Cents?

Shiba Inu (SHIB) has witnessed a fair share of...
spot_img

Related Articles

Popular Categories

spot_imgspot_img