The Bitcoin (BTC) price is facing significant downward pressure. As of now, BTC is trading at around $64,000 which is stagnant amid the adverse market conditions. While analysts worry about stupid money entering the area and pushing the Bitcoin price lower.
Dumb Money vs BTC
According to IntoTheBlock data, approximately 5.45 million addresses have accumulated 3.03 million BTC between the range of $64,300 and $70,800. As a result, this large concentration of Bitcoin at high prices constitutes a significant supply barrier. If the Bitcoin price continues to fall, these holders or stupid money traders may sell to limit their losses. This could end up exacerbating the downward pressure.
For context, dumb money refers to the individual or small investors who act emotionally and are less informed about the market trends. These traders are subject to panic selling during a downturn. Additionally, this selling trend was already noted for Bitcoin when the price extended below $67,000.
Meanwhile, dormant Bitcoin wallets have been particularly active this week. As Bitcoin price fell below $65,000, an on-chain analyst revealed that a single Bitcoin wallet moved 25,000 BTC in six separate transactions. Additionally, this movement added to the market’s anxiety.
The Bitcoin Spend Output Age Bands data shows that this wallet’s BTC, between the ages of 3 to 5 years, may be ready for a selloff as market sentiment turns pessimistic. Furthermore, the coming week is critical for the crypto market. Bitcoin and altcoins are under heavy selling pressure.
Over the past month, Bitcoin has fallen 10%, while altcoins have fallen 20-30%. In addition, 104,000 BTC options, worth $6.72 billion, will expire on Friday, June 28, 2024. With a put-call ratio of 0.52 and a maximum pain point at $57,000, the Bitcoin price is expected to remain under selling pressure.
Also Read: Crypto Market: PCE Inflation and Key Events to Shape Investor Sentiment This Week
What’s Next for Bitcoin Price?
Traders are also gearing up for US GDP growth rate data on Thursday and the Fed’s preferred inflation data, the PCE inflation data, on Friday. This coincides with the significant BTC options expiring. Moreover, this overlap could lead to increased volatility and potential price declines below $60,000, possibly even $57,000.
Adding to the pressure are significant Bitcoin ETF outflows, which topped $500 million in the past week. Furthermore, the German government has sent large amounts of BTC from its holdings to exchanges, increasing the market supply.
However, despite the ongoing selloff, more than 87% of Bitcoin holders are still in profit. This suggests that there is room for further profit-taking, which could push prices further down. Market analysts believe that Bitcoin price consolidation may continue until the end of summer 2024. As a result, a new bull run may begin around September, with major activity expected around the US elections.
Another key factor to watch is the PCE price release next Friday for May. A decline in core PCE already indicates downside risks for the index. So weak retail sales may also contribute to this trend, although personal income may see an improvement.
One positive sign is the reduction in Bitcoin exchange balances. In the past 30 days, more than 107,000 BTC have left crypto exchanges, which could lead to a supply crunch. The recent Bitcoin halving event also reduced block rewards to 3,125 BTC, limiting new BTC creation and helping to keep supply in check.
Earlier this month, the Federal Reserve took a hawkish stance on rate cuts despite cooling inflation data. This triggered a sell-off, with more than $4 billion worth of Bitcoin being sold by whales and miners. However, if the Fed cuts rates, some analysts believe that BTC could reach $100,000 by the end of the year.
In a post on X, popular crypto analyst Rekt Capital wrote: “Strong rejection of this lower high resistance yesterday to precede additional downside today. Bitcoin is not yet ready to end its downtrend in June. But it is still the downtrend to watch for a break once Bitcoin is ready to turn to the upside.His analysis points to further downtrend for BTC in the short term.
Also Read: Block CEO Jack Dorsey Says Bitcoin Could Replace US Dollar
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