Bitcoin (BTC) has dropped below $64,000, reaching a 5-week low, as the cryptocurrency market faces a broader correction. The king of crypto lost around 4% this week, trading at approximately $63,900. This is the first time BTC has fallen below $64,000 since mid-May.
The decline in Bitcoin's price is part of a broader market trend, with the total crypto market capitalization dropping by $110 billion to $2.33 trillion. Ethereum (ETH), the second-largest cryptocurrency, also lost 4% this week, trading around $3,400. Most altcoins are trading in the red, with some recording double-digit losses.
One of the main reasons for Bitcoin's struggle to reclaim the $64,000 level is the outflows from spot Bitcoin ETFs in the U.S. These ETFs have recorded outflows for five consecutive days, with a total of $900 million withdrawn this week, the highest since late April. Grayscale's GBTC and Fidelity's FBTC led the outflows, while BlackRock's IBIT was the only product with net inflows.
Another factor contributing to Bitcoin's downside is the declining network activity. Daily active addresses on the Bitcoin network have dropped by 35% over the last 90 days, from 971,789 addresses on April 4 to 632,620 on June 20. This suggests a decrease in investor interest and reduced network usage, which can weigh on BTC's price.
From a technical perspective, Bitcoin's price decline 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). The 200-day EMA at $64,294 provided the last line of defense for Bitcoin, but the price has now breached this support.
Avalanche (AVAX), on the other hand, has slumped 10% daily. The Metaverse sector, which includes projects like Axie Infinity, The Sandbox, and ICP, has also seen notable declines, with losses ranging from 12% to 19%.
The DeFi sector has not been spared either, losing almost $2 billion from the total value of locked protocols (TVL), which now stands at around $99 billion.
Despite the current market conditions, there have been some positive developments, such as MicroStrategy's purchase of 11,931 BTC worth almost $800 million and Fidelity's announcement to seed their Ethereum ETF with $4.7 million. However, the overall sentiment remains negative as the crypto market enters the last week of June.
In conclusion, Bitcoin's drop below $64,000 and Avalanche's 10% daily slump are part of a broader market correction. The reasons behind Bitcoin's struggle include outflows from spot ETFs, declining network activity, and the loss of key technical support levels.
The entire crypto market is painted in red, with most assets losing substantial gains in the past six months. While some projects have seen positive developments, the overall sentiment remains negative as the market navigates through the bears' territory.
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