Bitcoin’s Market Decline Explained: Miner Capitulation, Stablecoin Stagnation, and ETF Outflows

• South Korea-based analytics platform has disclosed that miner capitulation, stagnant stablecoin issuance, and substantial outflows from major spot Bitcoin ETFs are the main factors behind the Bitcoin pullback. 

• According to them, the selling pressure from miners and ETFs would have to be reduced for the price to bounce back. 

Bitcoin (BTC) continues its bearish extension as selling pressure slowly rubs off Year-to-Date gains, positioning the 30-day return to negative 2%. At press time, Bitcoin was trading at $65k after declining by 3.5% in the last seven days. 

Investigating the factors responsible for this unexpected market pullback, South Korea-based on-chain analytics provider CryptoQuant disclosed that miner capitulation, stagnant stablecoin issuance, and substantial outflows from major spot Bitcoin ETFs are the main culprits.

According to CryptoQuant, miners’ revenues have declined by 55%, forcing miners to liquidate their holdings to cover their operational costs. In investigating this claim, Crypto News Flash uncovered that more than 1,200 BTC was sold by miners, marking the highest amount recorded in two months.

On June 9, more than 3,000 BTC ($209 million) were moved to exchanges by miners with the majority coming from the btc.com mining pool into Binance. Selling activities among US miners have also increased with Marathon Digital (MARA) selling 1,400 BTC ($98 million) since the beginning of the month. Interestingly, these coincided with the temporary correction from $70,000 to $66,000. 

CryptoQuant also mentioned that the lack of new stablecoin issuances, specifically USDT and USDC has contributed to the ongoing bearish market. This suggests a considerable decline in new capital entering the market. On the third impactful factor, the researchers mentioned that the substantial outflow of spot Bitcoin ETFs from asset managers like Fidelity and Grayscale has contributed immensely to the ongoing market pullback. 

Spot Bitcoin ETFs Recorded Significant Outflow on June 17

According to data from Farside Investors, spot Bitcoin ETFs recorded a net outflow of $145.9 million on June 17. Per our research, most of these outflows came from Fidelity Wise Origin Bitcoin Fund ($92 million) and ARK 21Shares Bitcoin ETF ($50 million). For VanEck Bitcoin Trust (HODL) and Grayscale Bitcoin Trust (GBTC), the net outflows recorded were $3.8 million and $3 million respectively. Contrary to these outflows, Bitwise Bitcoin ETF (BITB) recorded an inflow of $2.9 million. In total, a net outflow of $580.6 million was recorded last week after four weeks of consecutive net inflows. 

Per the assessment of CryptoQuant, the combined effect of the above-listed factors includes the impartation of fear among short-term investors. In response, they have resorted to selling off their holdings to avert potential losses. Fascinatingly, this appears opposite to analyst Willy Woo’s position of attributing the ongoing selling pressure to long-term holders. As reported by Crypto News Flash, these long-term holders actively engaged in considerable selling earlier this year, mimicking a mid-2017 and 2021 pattern. 

Currently, the $62,400 price mark has been underlined as a robust support level for short-term investors based on the behavior of the previous bull market. According to them, selling pressure would have to be reduced from miners and ETFs to trigger a bounce back. 

Commenting on this, co-founder of trading resource Material Indicators Keith Alan disclosed how multiple moving averages (MAs) have now become a challenge after spot price slipped through them.

I set a trailing stop loss before leaving town to protect some profits in case Bitcoin dumped. That wick to $64k last night scaled me out of a position…Hopefully, I’ll be able to buy back cheaper and won’t regret that move. I’m optimistic. Losing the 21, 50 and 100-day moving averages are not exactly shining beacons of strength.