Bitcoin is still stuck in a tight range as market sentiment turns from bullish to bearish and market participants brace for a possible impact. The cryptocurrency was thriving on the possibility of a positive shift in the macroeconomic landscape. Did the bulls rush into a trap?
As of this writing, Bitcoin (BTC) is trading at $16,800 with sideways movement in the past 24 hours. Over the past week, the cryptocurrency has held onto some profits, but there is a possibility that the bullish trajectory will return to yearly lows.
Will Bitcoin Miners Help Lower Prices?
On the macro scene, the US Federal Reserve (Fed) is the biggest obstacle to future Bitcoin earnings. The financial institution attempts to lower inflation by raising interest rates. This monetary policy hurt risky assets.
Fed Chairman Jerome Powell has hinted at moderating monetary policy, but that possibility may become less likely. Recent strong economic data in the US could support further interest rate hikes.
The market is anticipating another 75 basis point (bp) hike for December. In addition to Fed tightening, the war between Russia and Ukraine adds to market uncertainty. The conflict takes a step back in the media headlines, but hostilities escalate.
#RussiaPutin says the threat of nuclear war is on the rise. Putin says Russia sees nuclear weapons as a response to an attack. Said that Russia’s nuclear weapons are a deterrent in conflicts. pic.twitter.com/5RMIc7UK6A
— Holger Zschaepitz (@Schuldensuehner) December 7, 2022
On the local scene, CryptoQuant data shared with NewsBTC from the latest Bitfinex report indicates that BTC miners are “mining a large amount of Bitcoin from their wallets.” These trades are often bearish indicators for the cryptocurrency.
Miners take BTC to sell on the market and cover their operating costs. This selloff is contributing to the bearish pressure on BTC. Bitfinex noted the following when sharing the chart below:
On the other hand, when the value of the indicator decreases, it indicates that miners are withdrawing coins from their wallet. Such a trend could be bearish for Bitcoin since miners could transfer their coins out of their wallets in order to sell them on the exchange. BTC exchange entries have also increased slightly over the past week after declining significantly over the previous few weeks.
Other Factors to Consider
In addition to struggling miners, the market is seeing BTC holders selling their coins at a loss. The Spent-Out Profit Ratio (SOPR) indicator is above one, which means investors are capitulating and cashing in due to current macro conditions.
Bitfinex pointed to the increase in retail investors holding BTC as a positive result of this data. These investors add to their balance as prices trend lower. These classes of investors, according to the report, are “resilient to price declines” and could finally put a floor in the price of BTC.