From a long-term investment thesis, bitcoin has rarely been more attractive than it is right now
Bitcoin (BTC) continued its descent toward $60,000 on Monday, marking a notable decline in the flagship cryptocurrency’s value. The price was last recorded at $61,211.00, a drop of more than 4%, according to Coin Metrics. Earlier, it touched a low of $60,666.30, its lowest level in over a month, resulting in an over 8% decline in the past week.
Digital asset investment products have experienced a second consecutive week of outflows, as reported by CoinShares. This downturn coincides with the lowest trading volumes for crypto investment products globally since the launch of U.S. bitcoin ETFs in January. James Butterfill, head of research at the crypto-focused asset manager, attributed the outflows to continued pessimism over the number of expected rate cuts, which has weighed on market sentiment since the recent Federal Open Market Committee (FOMC) meeting.
“The Fed has indicated they need to see further evidence of falling inflation before adopting a more dovish stance. Any macro data highlighting a drop in inflation will likely support crypto prices, while inflationary data will have the opposite effect,” Butterfill explained.
Eleanor Gaywood, head of strategy at Coincover, noted that market jitters often precede the release of the personal consumption expenditure index, the Fed’s preferred inflation gauge, due this Friday. She suggested that signs of a rate cut in September could calm investor nerves and stabilize bitcoin’s price.
The market also saw a significant increase in long liquidations, forcing traders to sell their assets at market prices to settle debts. CoinGlass reported that $97.83 million in long bitcoin liquidations occurred across centralized exchanges in the past 24 hours.
The decline in bitcoin’s value was mirrored across the cryptocurrency market. Ether dropped 4%, Solana’s token fell 3%, XRP slipped 1%, and dogecoin dropped nearly 5%. Equities linked to the crypto market, such as Coinbase and MicroStrategy, also suffered, retreating by nearly 4% and more than 5%, respectively. Crypto miners experienced losses across the board.
Last week, CryptoQuant suggested that bitcoin could slide back to $60,000 after breaking below the key support level of $65,800, citing a lack of bullish momentum. The company’s on-chain data indicates that traders have been reducing their holdings since bitcoin reached $70,000 in late May and have yet to resume buying.
For the month, bitcoin is down nearly 10%. After briefly touching $71,000 at the start of June, it has steadily declined. Since mid-March, it has fluctuated between $60,000 and $70,000 after reaching its all-time high of $73,797.68.
Despite recent volatility, investors and analysts remain optimistic about bitcoin’s long-term prospects. Ryan Rasmussen, an analyst at Bitwise Asset Management, described the current price action as “bullishly choppy,” emphasizing bitcoin’s 43% year-to-date gain and the progress on ether ETFs and favorable political trends for crypto. “From a long-term investment perspective, bitcoin has rarely been more attractive than it is right now,” Rasmussen said.
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