CryptoQuant, an on-chain analytics platform, has pinpointed three key factors contributing to the current market downturn, with Bitcoin miner capitulation being a significant driver.
The cryptocurrency market is currently experiencing significant sell-offs, wiping out gains from the recent bullish wave. This downward trend has persisted for several weeks, with Solana and Cardano both seeing over a 13% decline in their weekly performance.
Meme coins have been hit even harder, with Shiba Inu plummeting over 20% in just seven days. This sharp drop has caused concern among investors, leading to a decrease in positive sentiment towards large-cap cryptocurrencies.
As the bearish pressure continues, market participants are trying to understand the reasons behind this trend. A CryptoQuant analyst, IT Tech, has identified three crucial factors contributing to the recent market dip based on on-chain data.
Firstly, the report highlights that the overall market collapse was influenced by developments in the Bitcoin ecosystem, despite BTC itself experiencing a milder price drop. A major contributing factor is Bitcoin miners selling more BTC than usual to cover their operational costs, as their revenue has declined by 55%.
Additionally, there has been a decrease in the issuance of stablecoins such as USDT and USDC, indicating a lack of new money entering the market. This, coupled with outflows from Bitcoin spot ETFs, has further contributed to the market downturn.
The report suggests that the current fear in the market is triggering sell-offs among short-term investors, with the $62,400 support level being a crucial area to monitor. This level represents the average realized price for short-term holders and could help stabilize prices in the near future.
At the time of writing, Bitcoin is trading around $64,925, with a 3% decline from last week’s levels. It is essential for investors to conduct thorough research and exercise caution before making any investment decisions, as the market remains volatile.