Bitcoin's Hidden Struggle
Negative sentiments have become dominant, which is reflected in the cryptocurrency market capitalization dropping to $1.98 trillion, a 20.3% decrease in open interest in futures, and a 26% reduction in the total value locked (TVL) in DeFi since June, down to $81.2 billion.
Spot ETF buyers have also been disappointed by the market's dynamics, with investment outflows observed for six consecutive days. Total losses in this area have amounted to $805 million.
Bitcoin led the outflow from crypto funds. Last week was notable as, for the first time, Grayscale lost its leading position in investment losses. It was overtaken by ARKB, which lost $221 million over this period.
The main pressure on the price is coming from short-term holders (STH), which include clients of the bankrupt Mt.Gox exchange (who received compensation to new addresses) and the majority of Bitcoin-ETF buyers. However, from a historical perspective, the unrealized losses of STH are insignificant, currently amounting to only 2.9% of Bitcoin's capitalization.
The most sensitive investors to price drops will continue exiting the market until the price rises to $62,400. This is the base cost level of coins held by the STH group.
At the same time, the current decline is far from extreme values typical of bull cycles. While the maximum drop in 2024 reached 33.6%, in previous growth phases, it ranged from 40% to 60%.
As for the key factors significantly influencing Bitcoin, they include halving (a reduction in the incoming supply) and the growth of the fiat money supply. The active operation of printing presses perfectly highlights the deflationary nature of cryptocurrency.
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This year, major central banks are beginning to reverse monetary policy, promising an increase in the money supply in the next two to three years. Bitcoin investors just need to be patient.
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