Bitcoin has swept the February lows at $60k after plummeting downward on the price charts over the past three weeks. There was a risk of further losses because of heavy capital outflows from Bitcoin.
This capital flight was driven by a sentiment shift against crypto and in favor of traditional financial markets, as the S&P 500 reached record highs while crypto wallowed near yearly lows.
Institutional investors were facing the heat. Strategy was sitting on its largest-ever unrealized loss. AMBCrypto reported that short-term holders were selling their holdings almost exclusively at a loss, another indication of capital outflows.
An historic Bitcoin change of hands is afoot
Crypto analyst Darkfost pointed out that Bitcoin [BTC] was close to setting a historical record. The 30-day moving average of the transactions count was around 640,000, closing in on the 660,000 high made during the September 2024 correction.
It was unusual for the cycle, as high Transaction Counts tend to come alongside strongly bullish phases or market tops.
High Transaction Counts and falling price trends were indicative of a capitulation phase and a significant change of hands, one of the most noteworthy such changes in Bitcoin’s history, the analyst concluded.
Meanwhile, BTC miners’ profit margins took a dramatic nosedive. The Production Cost hovered around $43k over the past month, but the price has dived from above $80k to nearly $60k.
Miner profit margins fell from 98% to 47%. The daily hashrate also took a hit, falling by 33% in three weeks, but the metric’s 30-day moving average remained above the 60-day average.
The miner inflows to exchanges spiked, too, another indication of pressure. Heavy BTC Exchange Inflows of 10k-12k BTC a day warranted a cautious outlook until inflows normalize to 1,000-3,000 BTC a day.
The cascading sell pressure has not yet halted and a definitive market bottom might not be in. The sentiment was extremely fearful, and the ongoing capitulation episode can drive a BTC price move toward $51k.
Final Summary
- Bitcoin’s price drop to $60k was accompanied by falling hash rates and lowered miner profit margins.
- The high Transaction Count and heavy Exchange Inflows signaled a significant BTC change of hands and cascading selling pressure on the leading crypto.