Bitcoin's value plunged to its lowest point in more than a month, sparking widespread worry throughout the cryptocurrency market.
The decline in digital currency value was largely driven by factors such as short-selling, regulatory challenges, and broader economic patterns.
This decrease didn't just impact Bitcoin; other leading cryptocurrencies like Ethereum and Solana also felt the effects.
Bitcoin experienced a significant drop in value on June 11, 2024, reaching a monthly low of $66,177. This sudden decrease was primarily driven by short-term trading and increased market instability.
The broader sell-off in the cryptocurrency market significantly contributed to Bitcoin's challenges. Substantial sell orders created obstacles around the $70,000 mark, further causing prices to decline.
The selloff wasn't limited to Bitcoin alone. Major altcoins such as Ethereum, Binance Coin, and Solana also experienced huge losses.
For example, Solana's price dropped $135.42, which is a 23.54% decrease, and Ethereum experienced a downturn of $3,575.28, which is a 1.99% drop.
This pattern is reminiscent of Bitcoin’s historical volatility, meaning the market’s susceptibility to quick shifts in investor sentiment and broader economic influences.
Macroeconomic Pressures Contributing to Bitcoin Price Change
Recent fluctuations in Bitcoin's performance have been significantly influenced by macroeconomic factors.
The uncertainty stemming from increasing inflation rates and potential interest rate hikes by the Federal Reserve has led investors to become more risk-averse, prompting a sell-off of both traditional and digital assets.
SpaceX's decision to devalue and sell a large portion of its Bitcoin holdings has further exacerbated this trend, causing widespread effects across the market.
The overall economic climate has made investors cautious, contributing to the Bitcoin price change.
This risk-averse behavior is influenced by mixed macroeconomic data from the U.S. and a hawkish stance from the Federal Open Market Committee (FOMC), reducing the likelihood of Fed rate cuts this year.
CoinShares noted, "The FOMC’s hawkish stance likely caused last week’s massive outflows from digital assets."
Investor Sentiment and Outflows Cause Bitcoin Price Lowest
Investor sentiment significantly contributed to the recent Bitcoin decline. CoinShares' June 17 report highlighted a consistent five-week cycle of inflows into crypto investment products. However, last week saw a significant withdrawal of approximately $600 million by investors.
CoinShares analyst James Butterfill highlighted, "Digital asset investment products experienced outflows totaling US$600 million, the largest since March 22, 2024. This occurred under similar circumstances: a period of significant inflows followed by a more hawkish-than-expected FOMC meeting, prompting investors to scale back their exposure to fixed-supply assets."
The poor sentiment was mainly focused on Bitcoin, which saw outflows totaling $621 million, while short-Bitcoin also saw minor inflows totaling $1.8 million.
Data from Farside Investors supported this information, revealing that spot Bitcoin ETFs saw net outflows of $580 million for the week ending June 14.
High outflows from Bitcoin investment products suggest reduced investor interest, which weighs down on the BTC price.
Investors are expressing caution regarding the Bitcoin price change, leading to its decline to the lowest point in a month. This trend reflects a wider market sentiment.