Bitcoin pressured by risk-off mood
|Market picture
The pressure on risk assets continues, pushing the crypto market capitalisation back below the bi milestone of $2 trillion. This level acted as resistance in early February and support since May, except for a brief dip in early August. The horizontal correction pattern risks turning into a downtrend if the market breaks below the August pivot point near $1.85 trillion.
Bitcoin was under pressure for most of Thursday but made attempts to push back from the $56,000 level. However, on Friday, momentum selling at the start of the active European session pushed the price down to a low of $55.25K and then stabilised below $56K.
Despite the dollar’s weakness, the financial markets are still in an anxious and expectant mood, which is not helping Bitcoin as much as it is helping gold. A key technical support level for the BTCUSD remains just above $54K, but slippage in the event of a volatility spike could see the price briefly drop below $53K.
News background
According to CryptoQuant, the number of active wallets in the Bitcoin network has fallen to its lowest level in three years. Experts say this could lead to a further decline in the price of the first cryptocurrency.
Glassnode identified new investors as a risk factor for Bitcoin. The average new entrant incurs unrealised losses, which could increase selling pressure if BTC continues to fall. The break-even point for short-term holders is $62,400.
CryptoQuant calculates that Ethereum has fallen 44% against Bitcoin since the switch to Proof-of-Stake (PoS). Next week marks two years since the Ethereum network switched to PoS because of The Merge upgrade.
According to JPMorgan, the average revenue for miners of the first cryptocurrency has fallen to $43,600 per EH/s. Mining yields have hit record lows. Against this backdrop, the combined market capitalisation of 14 listed mining companies fell 15% over the month.
Californian authorities limited withdrawals from crypto machines to $1,000 per day. The initiative was put forward by the California Department of Financial Protection and Innovation (DFPI).
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