3 reasons why Bitcoin price struggles to reclaim $64K
2024.06.21 14:53
Bitcoin (BTC) dropped below $64,000 for the first time in over a month on June 21. Data from Cointelegraph Markets Pro and TradingView shows that BTC dropped from an opening at $64,840 to an intra-day low of $63,451.
The last time Bitcoin’s price traded below $64,000 was on May 15, when it rose from a low of $61,299 to set a swing high at $71,980 on May 21, fueled by excitement about a spot Ether (ETH) exchange-traded fund (ETF) approval.
At the time of publication, the largest cryptocurrency by market capitalization was trading at $63,552, down 3.54% over the last 24 hours.
BTC/USD daily chart. Source: TradingView
The broader crypto market capitalization is also down 3.24% over the same period to rest at $2.33 trillion, while Ether (ETH) was down 2.25% to $3,475.
Let’s look at some of the reasons why Bitcoin leads the market in a correction.
Bleeding spot Bitcoin ETFs weigh on BTC price
Investors’ risk-off sentiment is evident across the spot Bitcoin ETFs, where investors have been withdrawing their capital for days.
On June 19, spot Bitcoin ETFs in the U.S. recorded outflows for the fifth consecutive day, bringing the total withdrawals for the week to $900 million. This is the highest outflow activity since late April.
According to data from the crypto research platform SoSoValue, the 10 listed ETFs lost approximately $140 million on June 20.
Total spot Bitcoin ETF net flow. Source: SoSoValue
Grayscale’s GBTC, which has mostly seen outflows since its conversion to an ETF on Jan. 10, led with $53.1 million outflows, followed by Fidelity’s FBTC at $51.1 million. VanEck’s ETF reported $4 million in net outflows, while the funds from Invesco and Galaxy Digital saw $2 million in net outflows.
BlackRock’s IBIT, the biggest ETF by assets held, was the only product with net inflows totaling $1.5 million. Other funds from ARK Invest, Valkyrie, Franklin Templeton, WisdomTree and Hashdex recorded zero flows.
The total trading volume for the spot Bitcoin ETFs on June 20 amounted to $1.16 billion, down from $1.7 billion on June 18. The market was closed on June 19 for a public holiday.
Falling network activity backs Bitcoin’s downside
Another reason why Bitcoin’s price continues to scale downward could be reduced demand due to declining network activity.
Data from Glassnode reveals that daily active addresses on the Bitcoin network have dropped from 971,789 addresses on April 4 to 632,620 on June 20. This marks a 35% decrease over the last 90 days.
Number of active addresses on Bitcoin. Source: Glassnode
Popular analyst Ali Martinez also observed the reduced activity on the Bitcoin blockchain. In a June 21 post on the X social network, he shared a Glassnode chart showing that Bitcoin exchange inflow volume has been on a downward trend over the last three months.
“Bitcoin is experiencing a downturn in exchange-related onchain activity, indicating decreased investor interest in BTC and reduced network usage.”
Bitcoin exchange inflow volume momentum. Source: Ali Martinez
Decreasing onchain activity suggests a waning demand for BTC within the ecosystem, which weighs down on its price.
Bitcoin’s price loses key support levels
From a technical perspective, Bitcoin’s price decline today is part of a broader correction that started after it was rejected from the $72,000 resistance level on June 7. During this drawdown, BTC has lost key support levels, including the 50- and 10-day exponential moving averages (EMAs), which are currently at $66,724 and $66,594, respectively.
The 200-day EMA ($64,294) provided the last line of defense for Bitcoin.
BTC/USD daily chart. Source: TradingView
At the time of publication, BTC’s price was breaching the support provided by the 200-day EMA, accompanied by a 15% rise in daily trading volumes, signaling the activation of the continuation of the sell-off.
On the downside, the key levels to watch at $60,000 and the $56,500 swing low.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
