The Likely Causes of Bitcoin’s Recent Pullbacks: Miners Selling and Decline in ETF Inflows
Bitcoin’s price experienced a dip to $50,664 on February 21, raising concerns about widespread liquidations. On-chain data analysis suggests that two key factors contributed to the recent pullbacks:
- Bitcoin miners have sold BTC worth $8.2 billion in the previous 30 days, indicating a bearish sentiment among stakeholders and influencing price action.
- Bitcoin ETFs have not maintained the demand seen in the previous week, slowing down the buying trend by 73%.
Miners Selling BTC
Data from Cryptoquant’s miner reserves metric reveals that BTC miners hold a cumulative balance of 1,824,201 BTC as of February 22. This reflects a decline of 160,000 BTC from January 31, worth approximately $8.2 billion. The selling frenzy intensified after Bitcoin’s price hit a local peak of $52,858 on February 15. Miners hold around 10% of the total circulation supply, making their sell-offs significant for price movements.
Decline in ETF Inflows
The Bitcoin ETF had record-breaking inflows in the first half of February, contributing to the price rally. However, ETF demand has declined this week, with only 4,680 BTC acquired between February 19 and February 22 compared to last week’s accumulation of 17,480 BTC. This decrease in demand combined with miners’ selling spree ahead of the halving has prevented Bitcoin from breaking out towards a new all-time high above $60,000.
Price Forecast: Bitcoin’s Support and Resistance Levels
If Bitcoin loses its psychological support level at $50,000, it is likely to hold above $48,500 in the short term. The Bollinger Band technical indicator suggests that the 20-day Simple Moving Average (SMA) price at $48,560 could act as a significant support level. On the other hand, if Bitcoin reclaims the $53,000 level, a resistance level may emerge around $55,830, potentially leading to a consolidation phase or pullback.
Considering these technical dynamics, swing traders may set short-term stop-loss orders around $45,000 to manage risk in case of a breakdown below the $48,560 support level. Bullish traders may target take-profit orders around $55,000, anticipating resistance near $55,830 and aiming to capitalize on further upward movement.
Hot Take: The Impact of Miners and ETFs on Bitcoin’s Price
The recent pullbacks in Bitcoin’s price can be attributed to miners selling BTC and a decline in ETF demand. As a crypto enthusiast, it’s important for you to understand these factors and their influence on price movements:
- Miners selling BTC indicate bearish sentiment among stakeholders and significantly impact Bitcoin’s price action.
- ETF inflows contribute to price rallies, but when demand declines, it hinders upward movement.
To navigate these market dynamics effectively, monitor miners’ selling trends and stay updated on ETF demand. By doing so, you can make informed decisions about your crypto investments.
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