Bitcoin price is clinging to $ 32,000 as on-chain metrics point to further decline

Cryptocurrency investors awoke to another round of price declines on June 22, after Bitcoin’s (BTC) price fell to a 6-month low of $ 28,805. The decline below the all-important $ 30,000 mark may seem like an excellent buying opportunity, but the data shows that institutional investors are continuing their longest selling streak since February 2018.

Data from Cointelegraph Markets Pro and TradingView show the June 21 drop below $ 32,000 and the rally above $ 33,000 was just a precursor to Tuesday’s move, when BTC hit a low of $ 28,805 at the start of the trading day Before bouncing back around $ 32,000 at the time of writing.

1-day chart of the BTC / USDT pair. Fountain: TradingView

Ether (ETH) also took a hit, falling 15% to a low of $ 1,700 after the bulls failed to hold the $ 1,900 level. Unless a significant source of impetus emerges to reverse the trend in the market, the current trend remains negative, as evidenced by the bears dominating Bitcoin’s $ 2.5 billion expiry on June 25th.

Warning signs provided by data

Bitcoin price is clinging to $ 32,000 as on-chain metrics point to further decline
Bitcoin price is clinging to $ 32,000 as on-chain metrics point to further decline

While the price movement on June 21st may have come as a surprise to many, numerous indicators point to weakening momentum and the possibility of a further price decline.

According to data from Glassnode, The number of active addresses on both Bitcoin and Ethereum has dropped significantly from its highs in May, with active BTC addresses down 24% while active Ethereum addresses down 30%.

Number of active addresses in Bitcoin compared to Ethereum. Fountain: Glass knot

The decline in network activity has resulted in an even more dramatic depreciation of the USD, which is on-chain, with the billed amount for Bitcoin declining 63% to $ 18.3 billion per day and Ethereum decreasing 68% to $ 5 billion per day.

Total transfer volume of Bitcoin vs. Ethereum (USD). Source: Glassnode

A decrease in the activity and value of transactions in networks can be interpreted as a general decrease in enthusiasm, because investors who bought at the highs in April and May now have to decide whether to sell at a loss to avoid further downward movements, or in the hope that the market will eventually recover.

China’s actions lead to panic

Another major cause of the market slowdown, which has been increasing for weeks, is China’s crackdown on cryptocurrency mining operations in the country. This has resulted in a significant drop in the record hash rate to what was last seen in September 2020.

Bitcoin’s average hash rate. Fountain: Glass knot

While the closure of a large number of Chinese mining farms and the resulting drop in the hash rate represents a negative development in the short term, Delphi Digital takes the position that this should be considered healthy for the Bitcoin network in the medium and long term, given the risk of a hash -Rate concentration is significantly reduced.

According to Delphi Digital, The concentration of hash rate in China-based mining pools has declined since China began cracking down on mining, allowing smaller pools to “increase their share from 30.81% to 37.96% in the past 30 days to increase”.

Bitcoin hashrate mix. Fountain: Delphi Digital

In addition to the mining crackdown, China has also reiterated that banks should not support cryptocurrency-focused OTC deals, creating “panic among Chinese miners and investors” that has resulted in a significant drop in the supply of BTC affecting the addresses of the Miners concentrated.

Bitcoin miners’ net positions change over time. Fountain: Delphi Digital

With China unlikely to change its current approach to cryptocurrencies in the short term, investor uncertainty and erratic price action are likely to persist in the near future.

The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade move involves risk, you must conduct your own investigation when making a decision.

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