The price of bitcoin is falling once again, after seeing some recovery on Wednesday due to the change in net flows to spot bitcoin ETFs. However, just one day later, it seems that the pioneering cryptocurrency has resumed the downward trend and this decline after the recovery has started a worrying trend. So what are the factors driving this decline?
bitcoin price suffers massive sell-off
One of the main factors behind bitcoin's decline is the huge sales that have rocked the digital asset. These sales are not just from any investor, but from large btc sales orchestrated by large governments.
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One of the biggest news that shook the space was the fact that the German government had started selling coins. In total, the German government sold around 2,786 btc, worth around $140 million at the time of sale.
However, the German government is not the only one that has been selling. It also emerged that the US government had once again begun moving bitcoin seized in the Silk Road crash. On-chain data aggregator Arkham reported that the US government had moved nearly 4,000 btc from its wallets to the Coinbase exchange.
Total, btc–bitcoin-price-analysis/” rel=”nofollow”>US government transferred 3,940 btc to exchangewhich amounted to $241.22 million at the time of the transaction. This transfer is concerning as coins are usually moved to centralized exchanges like Coinbase for sale, as these trading platforms possess deeper liquidity compared to their decentralized counterparts.
Has btc reached its lowest point?
While the downtrend appears to have resumed, there are signs that the bottom is closing. One of these signs is the return of demand to the market. For example, bitcoin Spot ETFs had experienced seven consecutive days of capital outflows, which finally turned around on Tuesday. Coinglass Data bitcoin-etf” rel=”nofollow”>sample that between Tuesday and Wednesday, inflows into bitcoin Spot ETFs have exceeded $50 million, ending the brutal week of outflows.
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Another possible indication is the profit and loss margin for investors. This shows how many bitcoin investors are currently making profits, and the higher the profitability, the greater the likelihood of a liquidation as investors profit from their positions.
However, profitability levels have fallen, meaning investors are less likely to sell their holdings while waiting for better prices. This often gives demand time to build up and create a potential rebound point for a recovery.
For now, bitcoin price remains stable at the $61,000 support at the time of writing. But if the sell-off resumes, the pioneering cryptocurrency could soon fall to the $60,000 level.
Featured image created with Dall.E, chart from Tradingview.com
