Why is today's price of Bitcoin lower?
Due to significant withdrawals from BTC ETFs and a sharp decline in Bitcoin’s market dominance, as various altcoins began attracting increased investor interest, Bitcoin’s price has currently dropped to its lowest level in over a month, marking a notable shift in trading sentiment and portfolio diversification across the market.
Bitcoin BTC tickers down $64,031 saw a 2.30% decline on June 21, hitting $63,500, its lowest point in more than a month. A number of withdrawals from Bitcoin’s spot exchange-traded funds (ETFs) and a discernible fall in BTC market dominance as altcoins gained traction were blamed for this decline.
Spot Bitcoin ETFs outflows resume
The recent decrease in the price of bitcoin comes after several days of withdrawals from its U.S.-based spot ETFs. Notably, since June 10, withdrawals from these investment vehicles have totaled about $500 million.
A strengthening of the US dollar relative to a basket of leading international currencies and these ETF withdrawals indicate that investors are becoming less risk-averse. This comes after the Fed decreased its projected number of rate cuts in 2024 from four to only one due to conflicting macroeconomic data from the US and the Fed.
The opportunity cost of keeping riskier assets, such as cryptocurrencies, is decreased in a scenario with higher interest rates. This is a feeling that has weighed down on Bitcoin prices recently, particularly today.
The market dominance of Bitcoin declines
The losses that Bitcoin is currently experiencing align with its diminishing market share in the broader cryptocurrency landscape. This shift reflects changing investor preferences and growing interest in alternative cryptocurrencies. Notably, on June 21, the Bitcoin Dominance Index (BTC.D), which gauges the market capitalization of Bitcoin relative to the whole cryptocurrency market, fell by 0.55% to 55.14%, extending its downward trend from the local peak of 56.29% set just three days prior. This decline indicates a significant shift as investors increasingly diversify their portfolios, seeking out emerging altcoins that offer unique features and potential for higher returns. As competition intensifies, Bitcoin’s long-standing position as the market leader is being challenged, which may further impact its price dynamics in the near future.
In other words, following the U.S. Securities and Exchange Commission’s (SEC) decision to conclude its investigation into Ethereum, the largest cryptocurrency by market capitalization, the majority of investors have shifted their capital from the Bitcoin market to explore potential in altcoins.
These tendencies are also evident among institutional investors; according to the CoinShares weekly report, investors are expanding their exposure to altcoins, especially Ether ETH, while withdrawing money from investment funds based on Bitcoin.
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“The outflows were entirely focussed on Bitcoin, seeing US$621 million outflows, the bearishness also prompted US$1.8 million inflows into short-bitcoin,” according to CoinShares.
Bitcoin price: a technical adjustment?
Today’s losses for Bitcoin are a part of a larger correction that is taking place inside of its bull flag pattern.
Two parallel, downward-sloping trendlines following a significant upward advance define a bullish continuation pattern known as a bull flag. According to technical analysis, the pattern closes when the price climbs to the height of the preceding upswing and breaks over the upper trendline.
Similar: Sideways for six months? The price of bitcoin is similar to the 2023 lull
After testing the upper trendline of its bull flag pattern, the price of bitcoin was retreating as of June 21. It was aiming for a further decline toward the lower trendline below $60,000, which it might reach by the end of June.
