Bitcoin Price Fluctuates Amid Stablecoin, Fiat, and ETF Market Dynamics

Bitcoin's price influenced by stablecoins, fiat, and ETF market dynamics.

Tuesday, June 25, 2024 3:08 AM UTC

According to Ki Young Ju (via CoinGape), the founder and CEO of CryptoQuant, Bitcoin's price is presently influenced by three primary buy-side liquidity channels: stablecoins, fiat currencies, and spot-based ETFs. These factors are affecting the cryptocurrency price and the market trajectory until June.

Recent statistics show that the stablecoin market cap has increased; however, compared to the BTC market cap, it remains relatively close to its previous ATHs.

According to Ki Young Ju, a market analyst, the stablecoin exchange reserves ratio is comparable to these ATH levels. This suggests that stablecoins have already been utilized in buy-side liquidity, and additional inflows of stablecoins may be necessary to initiate another significant upswing in the event of additional considerable price fluctuations.

Simultaneously, the Coinbase premium has been negative for the past week, which can be attributed to the general market sentiment and the lack of robust fiat inflows that would have bolstered the price of Bitcoin. This trend indicates that it is easier to maintain the growth trajectory with new fiat capital injections.

Spot ETFs Struggle Amid Bitcoin's Price Drop, Analysts Debate Potential Rebound and Buying Opportunities

The net average performance of Spot ETFs has been negative for the past two weeks. Some analysts anticipate that these exchange-traded funds (ETFs) may experience a resurgence, as Bitcoin may mitigate the political risks associated with the forthcoming events of the year. Nevertheless, Bitcoin experienced a substantial decline of 6.26% in a single day, the most significant drop in nearly 100 days.

This has prompted market experts to inquire about the feasibility of purchasing opportunities currently available, given Bitcoin's historical performance following comparable declines.

Some emphasize the potential price revival suggested by Bitcoin's oversold territory of its Relative Strength Index (RSI). The RSI had been at comparable levels for two years before this significant price increase.

Others, such as Samson Mow, emphasize that the current price fluctuations are more influenced by sentiment and dread than substantial sell-offs from large holders. Mow declared,

“Everyone selling Bitcoin now will regret it within a year. I’m talking about the ‘biggest mistake of my life’ level of regret. Deathbed lamentation level regret.”

Upcoming US Election and Market Sentiment Shape Bitcoin's Future Amid Divergent Political Stances

Political events are also expected to influence the future price of Bitcoin. The market is apprehensive about the forthcoming US presidential election. The former US President, Donald Trump, has expressed his willingness to accept political contributions in cryptocurrency and endorsed Bitcoin mining.

The current administration's approach is in stark contrast to Trump's stance. President Joe Biden's re-election campaign has been contacting the crypto industry for advice on digital asset policies, a departure from his administration's previous less favorable stance on cryptocurrency.

CryptoQuant's Exchange Flow Multiple for Bitcoin has plummeted to less than 0.6, indicating a lack of speculative demand in the market. This level has been observed at the $30K mark, following which the growth was generally observed to persist.

The negative Coinbase premium will also prompt miners and long-term holders to sell. The market's bearish trend results from the disparity in traders' entry-level prices, the absence of new fund inflows into ETFs and custody accounts, and the pressure. Some market participants also noted that the demand for Ethereum is more significant than that for Bitcoin, which may indicate the onset of an altcoin season.

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