Bitcoin has hit its February low of $60,000 after sliding down the price charts for the past three weeks. There was a risk of further losses due to heavy capital outflows from Bitcoin.
This capital flight was driven by a sentiment shift toward crypto and in favor of traditional financial markets, as the S&P 500 reached record highs while crypto hit near-yearly lows.
Institutional investors felt the heat. Strategy suffered its largest unrealized loss ever. AMBCrypto reported that short-term holders sold their holdings almost exclusively at a loss, another indication of capital outflows.
A historic Bitcoin exchange is underway
Crypto analyst Darkfost pointed out that Bitcoin [BTC] was close to setting a historical record. The 30-day moving average of transactions was around 640,000, reaching a high of 660,000 during the September 2024 correction.
This was unusual for the cycle, as high transaction numbers are often accompanied by strongly bullish phases or market tops.
High transaction numbers and downward price trends were indicative of a capitulation phase and a significant change of ownership, one of the most notable changes in Bitcoin history, the analyst concluded.
Meanwhile, BTC miners’ profit margins took a dramatic nosedive. Production costs have been hovering around $43,000 for the past month, but the price has dropped from over $80,000 to almost $60,000.
Miners’ profit margins fell from 98% to 47%. The daily hashrate also took a hit, falling 33% in three weeks, but the metric’s 30-day moving average remained above the 60-day average.
The inflow of miners to exchanges also spiked, another indication of pressure. The exchange’s heavy BTC inflows of 10,000 to 12,000 BTC per day warranted a cautious outlook until inflows normalized to 1,000 to 3,000 BTC per day.
The cascading selling pressure has not yet stopped and a definitive market bottom may not yet have arrived. The sentiment has been extremely scary, and the continued capitulation could cause BTC to surge towards $51,000.
Final summary
- Bitcoin’s price drop to $60,000 was accompanied by falling hash rates and lower profit margins for miners.
- The high number of transactions and large currency inflows indicated a significant change in ownership of BTC and cascading selling pressure on the leading crypto.