Analysts: Bitcoin diverges from US equities amid supply issues

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As a seasoned crypto investor with several years of experience in the market, I find the recent price action of Bitcoin (BTC) quite intriguing. While U.S. equities continue to surge, BTC has shown signs of weakness and underperformance.

Bitcoins market dynamics have shifted noticeably, deviating from the ongoing bullish trend in the US stock market. The cryptocurrency is currently grappling with hurdles as it strives to breach the $63,000 mark.

As an analyst, I’d rephrase it as follows: Based on the Bitfinex report I’ve examined, the opening hours of H1 2024 were marked by market optimism, resulting in a new all-time high for Bitcoin at around $73,000. However, this positive sentiment started to wane mid-year, with Bitcoin encountering various challenges in June that caused its price to drop significantly. Currently, Bitcoin is approximately 15% lower than its March peak.

According to analysts at Bitfinex, current policies have noticeably reduced Bitcoin’s price swings and obstructed its advancement. Santiment’s data reveals a substantial decrease in Bitcoin’s weekly volatility from 13.06% in mid-March to a record low of 1.98% in June.

As a Bitfinex market analyst, I’ve noticed that long-term investors, who previously held back from selling in early May, have recently started offloading their holdings once again. This renewed selling pressure, combined with an excess supply of cryptocurrencies, continues to put downward pressure on the market.

As a researcher studying the Bitcoin market, I’ve noticed an intriguing trend based on on-chain data. Long-term investors are once again cashing out their profits, even at prices below last year’s all-time high of approximately $69,000. Although miner sell-offs have lessened, indicating some market stabilization, the significant profit realizations by long-term holders cast a bearish shadow over Bitcoin’s short-term prospects.

A significant contributor to the surplus of Bitcoin in the market is the possibility of sales from Mt. Gox depositors and the German government. These two entities possess large quantities of Bitcoin, and they could decide to sell their holdings. This potential action increases investor anxiety due to fear, uncertainty, and doubt (FUD) surrounding the market.

In the wider economic context, certain indicators may favor risky assets such as Bitcoin, according to the report. The Personal Consumption Expenditures Index, which the Federal Reserve uses to measure inflation, did not change in May. Analysts further commented that this constancy increases hope for a possible interest rate reduction in September.

According to the most recent third-quarter projection for US Gross Domestic Product, there are signs of vulnerability beneath the surface. This revelation emerges as consumer confidence has been gradually waning.

Although the economic climate appeared promising for Bitcoin, its performance did not meet expectations. Instead of mirroring the surge in U.S. equities, Bitcoin broke free and followed a different path. In June alone, Bitcoin experienced a decline of more than 8%, while the S&P 500 index saw a comparatively smaller gain of 3.5%.

Bitfinex analysts argue that supply conditions aren’t the sole cause of the price discrepancy. They identify speculative buying and news-driven selloffs as significant contributing factors. Currently, Bitcoin is more influenced by unfavorable news due to decreased enthusiasm in the spot market and recent outflows from investment products.

As a researcher studying the cryptocurrency market, I’ve noticed that Bitcoin, which had been showing promising signs in July, has experienced a setback this month. Specifically, the asset has dipped 0.18% since the beginning of July, following a 0.35% decrease this morning. At present, Bitcoin is being traded at $62,675. This marks a reversal from the modest gains it had initially achieved during the first day of the month.

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2024-07-02 13:16