In the world of cryptocurrency, a woman holds a smartphone displaying a bearish trend for Bitcoin. The digital currency’s value took a hit recently, dropping nearly 4% to around $66,000 before making a slight recovery. This decline was likely triggered by trader concerns over upcoming US inflation data and the Federal Reserve’s impending decision on monetary policy.
While the downturn has excited Bitcoin short contract traders, the possibility of an uptrend could result in a short squeeze. Investors are closely monitoring key economic events that could impact Bitcoin, such as the release of the consumer price index (CPI) data on June 12. Higher inflation could lead the Federal Reserve to consider raising interest rates, reducing the attractiveness of riskier assets like Bitcoin. The uncertainty surrounding the Federal Reserve’s policy meeting adds to the market’s apprehension.
The recent US employment report, which revealed a stronger-than-expected addition of 272,000 jobs in May, along with higher wage increases, indicates a resilient economy. This has raised concerns among investors about the potential for sustained high interest rates, which could negatively affect Bitcoin. The cryptocurrency’s struggle to break above the $72,000 resistance level has also shaken confidence in its price action. Rising bond yields further dampen investors’ risk appetite.
On-chain metrics from Glassnode paint a bearish picture for Bitcoin’s price. A decline in the number of addresses holding large amounts of Bitcoin, such as 10,000 BTC, suggests that major investors, known as “whales,” are either selling off their holdings or reallocating their assets. This lack of confidence in Bitcoin’s short-term prospects is evident in the data for addresses with at least 1,000 BTC as well.
The volatility in addresses holding 100 BTC indicates uncertainty among smaller large holders, who may be reacting to market fluctuations and macroeconomic factors. This instability could lead to increased selling pressure, exacerbating price declines. The decrease in the number of large Bitcoin holders signals a lack of confidence in the cryptocurrency’s performance, potentially leading to increased market volatility and struggles to maintain key support levels.
As major holders continue to offload their assets, the downward pressure could breach support levels, resulting in further price drops for Bitcoin.
