Stupid Money May Cause Bitcoin Price Correction, Here’s Why
Bitcoin (BTC) price is facing serious downward pressure. As of now, BTC is trading at around $64,000, remaining inactive amid adverse market conditions. Meanwhile, analysts are worried that stupid money will invade the region and crash the price of Bitcoin.
Stupid Money vs BTC
According to IntoTheBlock data, 3.03 million BTC between $64,300 and $70,800 has been accumulated in approximately 5.45 million addresses. Therefore, this large concentration of Bitcoin at high prices creates a significant supply barrier. If the Bitcoin price continues to fall, these holders or fool coin traders may sell to limit their losses. This could ultimately intensify downward pressure.
Overview of Bitcoin Addresses, Source: Ali Martinez | X
In context, dumb money refers to individual or retail investors who act emotionally and are less informed about market trends. These traders are subject to panic selling during a crisis. Moreover, this selling trend for Bitcoin was already noted when the price dropped below $67,000.
Meanwhile, dormant Bitcoin wallets were clearly active this week. As the Bitcoin price fell below $65,000, an on-chain analyst revealed that a single Bitcoin wallet moved 25,000 BTC in six separate transactions. Additionally, this move increased the uneasiness in the market.
Bitcoin Spending Output Age Bands data shows that this wallet’s 3 to 5 year BTC could be poised for a selloff as market sentiment turns pessimistic. Moreover, the coming week is critical for the crypto market. Bitcoin and altcoins are under intense selling pressure.
While Bitcoin fell by 10% last month, altcoins fell by 20-30%. Additionally, 104,000 BTC options worth $6.72 billion will expire on Friday, June 28, 2024. With a bid-ask ratio of 0.52 and a maximum pain point of $57,000, Bitcoin price is expected to remain under selling pressure.
Also Read: Crypto Market: PCE Inflation and Key Events That Will Shape Investors’ Sentiment This Week
What’s Next for Bitcoin Price?
Investors are also bracing for Thursday’s U.S. GDP growth rate data and Friday’s PCE inflation data, the Fed’s preferred inflation data. These coincide with major BTC options expirations. Moreover, this overlap could lead to increased volatility and a potential price drop below $60,000, possibly even dropping to $57,000.
Significant Bitcoin ETF outflows, exceeding $500 million last week, are also adding to the pressure. Moreover, the German government is increasing the market supply by sending large amounts of BTC from its holdings to exchanges.
But despite the ongoing sell-off, more than 87% of Bitcoin holders are still in profit. This suggests that there is room for further profit booking, which could push prices further down. Market analysts believe that Bitcoin price consolidation may continue until the end of summer 2024. Therefore, a new bull run could begin around September, with major activity expected around the US elections.
Another important factor to watch is the PCE price for May, which will be announced next Friday. The decline in core PCE currently signals downside risks for the index. So, although there may be an improvement in personal income, weak retail sales may also contribute to this trend.
A positive sign is the decrease in Bitcoin exchange balances. More than 107,000 BTC have left crypto exchanges in the last 30 days, which could lead to a supply shortage. The last Bitcoin halving event also reduced block rewards to 3,125 BTC, limiting new BTC formation and helping keep supply under control.
Earlier this month, the Fed took a hawkish stance on rate cuts despite cooling inflation data. This caused a wave of selling, with over $4 billion worth of Bitcoin sold by whales and miners. However, if the Fed lowers interest rates, some analysts believe BTC could reach $100,000 by the end of the year.
Bitcoin Price Analysis, Source: Rekt Capital | X
Popular crypto analyst Rekt Capital wrote in a post on “It remains the downtrend line to watch for a breakout when it is ready to reverse.” His analysis shows that BTC will enter a further downtrend in the short term.
Also Read: Block CEO Jack Dorsey Says Bitcoin Could Replace US Dollar
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