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BTC price is trading at $56,249.12 as of writing, marking a 4.68% decrease in the last 24 hours. This drop is part of a larger 10% drop over the last two weeks, driven by a combination of factors, including recession fears, spot Bitcoin ETF outflows and concerns over miner profitability.
Despite earlier optimism fueled by expectations of the Federal Reserve easing monetary policy, Bitcoin's recent performance has been more closely tied to the U.S. dollar's movements and overall monetary policy rather than recession concerns. The market cap now stands at $1.1 trillion, while its 24-hour trading volume has gained by 26.40% to $32.4 billion.
One of the key factors weighing on investor sentiment is the persistent outflows from spot Bitcoin ETFs. Recent data from Farside Investors shows that between August 27 and August 30, these funds experienced net outflows of $480 million, effectively erasing the $455 million in inflows from the previous two days. The trend continued on September 3, with spot Bitcoin ETFs seeing net outflows of $287.8 million. Notably, Grayscale's Bitcoin ETF has witnessed a staggering $2.2 billion in outflows over just five days.
Adding to the bearish pressure is the declining profitability of Bitcoin mining operations. Miner profitability is approaching all-time lows, raising concerns about potential sell-offs. Currently miners hold over 1.8 million BTC, a figure that has remained relatively stable over the past two months. However, the recent decline in Bitcoin's hashrate index, which measures expected earnings from mining power, has heightened worries about miner capitulation.
Looking at the technicals, Bitcoin has been in a bearish trend since reaching a recent high of $65K on August 25. BTC has been consolidating at a support level formed by a mini-bullish flag pattern around $57K, which served as a retest of a previously broken-out pattern within the main bullish flag. The price has since broken below this support, dropping to the next support level at $56,177 as analyzed in our previous report.
The daily RSI currently sits at 39, indicating selling pressure in the market. If Bitcoin fails to hold the $56K level, it may see further downside to the next major support at $52K, which coincides with the base of the larger bullish flag pattern.
Metrics data suggest that fear, disbelief and anger are at peak levels in the crypto space. Ali Martinez has pointed out that the crypto market has been gripped by fear over the past week.
Martinez also notes a potentially bearish signal on the 2-month chart, where the Stochastic RSI has indicated a trend reversal from bullish to bearish. Historically, such a signal has preceded significant corrections of around 75.50% over the past decade.
Despite the current bearish outlook, Bitcoin could eventually trade higher. However, in the near term, multiple factors continue to back up the downward pressure on the BTC price.
