Experts Observe Bitcoins Path Deviates from US Stocks Due to Circulation Constraints
Bitcoin (BTC) has recently exhibited a notable shift in market dynamics, diverging from the bullish trends seen in U.S. equities, as it grapples with challenges surpassing the $63,000 price threshold.
At the onset of H1 2024, optimism prevailed in the crypto market, propelling Bitcoin to an all-time high above $73,000, according to insights shared by Bitfinex with crypto.news. However, this bullish sentiment waned by mid-year, with Bitcoin encountering several obstacles throughout June. As of now, BTC has retraced nearly 15% from its peak in March.
Bitfinex analysts underscored that prevailing policies have substantially curtailed Bitcoin’s volatility, stymieing its upward momentum. Data from Santiment illustrates a significant decline in Bitcoin’s weekly volatility, plummeting from 0.1306 in mid-March to a yearly low of 0.0198 by June.
The market downturn has been exacerbated by long-term holders resuming their selling activities since early May, alongside an overhang of supply, as noted by Bitfinex. Despite reduced miner sell-offs suggesting some stabilization, the high profit-taking levels among long-term holders paint a bearish near-term outlook for Bitcoin, even with prices below the 2021 peak of approximately $69,000.
A key factor contributing to the supply overhang stems from potential liquidations by Mt. Gox depositors and the German government, both holding substantial Bitcoin reserves. This situation has amplified fear, uncertainty, and doubt (FUD) among investors.
In a broader economic context, some indicators suggest potential benefits for risk assets like Bitcoin. The stability of the Personal Consumption Expenditures Index in May, which the Federal Reserve uses to gauge inflation, has fostered optimism about a prospective rate cut in September. Conversely, the latest third-quarter U.S. GDP estimate exposes underlying weaknesses amid a gradual decline in consumer confidence.
Despite these favorable economic signals, Bitcoin has not capitalized on expected gains, diverging sharply from the upward trajectory of U.S. equities. In June alone, while the SPX index rose by 3.5%, Bitcoin saw its value plummet by over 8%.
Bitfinex analysts attribute this divergence not only to supply dynamics but also to speculative trading and news-driven sell-offs. The declining interest in the spot market and recent negative flows from investment products have further compounded Bitcoin’s sensitivity to adverse news.
Looking ahead to July, despite an overall positive outlook, Bitcoin has faced setbacks, declining by 0.18% this month, including a 0.35% drop this morning. As of the latest update, Bitcoin is trading at $62,675, having erased modest gains observed at the beginning of the month.
For more insights, Korean crypto exchanges plan to navigate regulatory changes without resorting to mass delistings, emphasizing adaptation over disruption.
