Bitcoin’s price is falling again after rebounding somewhat on Wednesday amid a shift in net flows of Spot Bitcoin ETFs. However, just a day later, the pioneering cryptocurrency appears to have resumed its downward trend, and this post-recovery decline has started a disturbing trend. So what are the factors causing this decline?
Bitcoin price is suffering from sell-offs
One of the main factors behind the decline in Bitcoin value is the vast sell-offs that have rocked the digital asset. These sell-offs are not just being done by any investor, but rather vast BTC sell-offs organized by major governments.
One of the major news that shook the space was the fact that the German government started selling coins. In total, the German government sold approximately 2,786 BTC, which was worth approximately $140 million at the time of sale.
However, the German government is not the only one selling. News also broke that the US government has again started moving Bitcoins seized from the Silk Road bust. Online data aggregator Arkham reported that the US government transferred almost 4,000 BTC from its wallets to the Coinbase exchange.
Together, the US government transferred 3,940 BTC to the exchange, which at the time of the transaction amounted to USD 241.22 million. This transfer is concerning because coins are typically transferred to centralized exchanges such as Coinbase for sale, as these trading platforms have greater liquidity compared to their decentralized counterparts.
Has BTC hit bottom?
While the downtrend seems to be resuming, there are signs that point to a bottom closing. One of them is the return of demand to the market. For example, the Spot Bitcoin ETF saw seven consecutive days of outflows, which finally reversed on Tuesday. Data from Coinglass to introduce that inflows into Spot Bitcoin ETFs topped $50 million between Tuesday and Wednesday, ending a brutal week of outflows.
Another possible indicator is the profit and loss margin for investors. This shows how many Bitcoin investors are currently seeing a profit, and the higher the yield, the greater the likelihood of a sell-off as investors take profits from their positions.
However, yield levels have fallen, meaning investors are less willing to sell their shares while waiting for better prices. This often gives demand time to build and create a possible rebound point for recovery.
For now, Bitcoin price holds steady at the support level of $61,000 at the time of writing. But if sell-offs resume, the pioneering cryptocurrency could soon fall to the $60,000 level.
Featured image created with Dall.E, chart from Tradingview.com