According to CryptoQuant, there might be a few reasons the crypto market is currently down.
For example, the reduced Bitcoin rewards after the April 2024 halving and the stagnant prices are forcing miners to sell, putting downward pressure on the market.
Less new money is entering the market through stablecoins like USDT and USDC, reducing liquidity and increasing volatility.
Investors also pull money out of spot Bitcoin ETFs, contributing to the selling pressure.
These factors are causing fear among short-term investors, pushing them to sell their Bitcoin and prolong the decline.
The crypto market is currently battling with its bears overall, and according to CryptoQuant, there might be a good reason for this.
According to the on-chain data aggregator, the market is currently trading under a cloud of “fear and selling” among short-term investors, leaving Bitcoin hanging over a possible drop to the $62,400 price level.
Here are three reasons why the crypto market is currently down, what might happen next, and what needs to change for the bulls to retake control.
According to CryptoQuant, one of the major factors affecting the market's current behavior is miner capitulation.
Since the April 2024 halving, the Bitcoin miners have seen their block rewards cut in half, from around 6.25 Bitcoin per block to 3.125 Bitcoin per block.
Bitcoin currently trades below its 2021 bull market all-time high of $69,000. Yet, despite the reduced block rewards and the stagnant Bitcoin price, the miners still have to make ends meet.
Bitcoin’s daily miner revenue
CryptoQuant's analysis shows that miner revenues have plummeted by around 55% since, forcing them to sell more Bitcoin to cover the operational costs of their mining rigs.
The rush of Bitcoin from miner wallets into exchanges for selling continues to heap more selling pressure on the price of Bitcoin, forcing it lower and lower.
Hence, the current market dip.
Another factor contributing to the downward pressure on Bitcoin is the slowdown in stablecoin issuance, particularly with the heavyweight stablecoins, USDT and USDC. CryptoQuant suggests that this declining trend in stablecoin issuance means that the supply of fresh capital into the market is dwindling.
Bitcoin’s correlation to USDT’s market cap change
As a result, liquidity is suffering, and now the crypto market is more prone to aimless volatility as we have seen with Bitcoin—consolidating for the last three months and retesting the $71,555 zone four separate times since then.
The third factor behind the current market decline is the ongoing flow of Bitcoin out of the spot Bitcoin ETFs.
Data from Soso Value shows that as of 18 June alone, the spot Bitcoin ETF market lost $152.42 million—this is without mentioning the $145 million, $190 million, and $226 million that flowed out on 17 June, 14 June and 13 June respectively.
The ongoing ETF outflows
According to CryptoQuant, these outflows are creating additional selling pressure on Bitcoin. Fidelity alone accounted for 1,384 BTC outflows on 17 June, worth $92 million out of the total $145 million.
CryptoQuant emphasized that these combined factors have created an aura of fear and uncertainty, especially with short-term investors or investors who hold Bitcoin for less than 155 days.
These investors tend to get shaken off the market easily, selling their Bitcoin and contributing to the overall downward pressure.
Moreover, the average realized price for these short-term holders sits at around $62,400, which should likely stop Bitcoin if the declines continue.
On the brighter side, however, all of these indicators typically converge to warn investors of a possible market bottom.
Typically, when we see prolonged periods of low miner revenue and high hash rates simultaneously, we can expect a market stabilization of sorts or even an upcoming rebound.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.