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An analyst cited by CryptoQuant theorized that a bottom was in play with the recent market-wide slump.
The total cryptocurrency market declined by more than 7% over the past week and more than 3% in a month. Notably, Bitcoin (BTC) dropped below the $65,000 mark while altcoins suffered massive corrections.
Altcoins, typically more volatile than Bitcoin, have fared worse than the top virtual currency and lost over 4% of of market value in the last 30 days. BTC has shed around 3% in the same timeframe, but the token seems locked in a sideways pattern.
Miner Capitulation
A CryptoQuant report noted that miner capitulation was a major reason for the dip in the total market cap to $2.4 trillion. Following the Bitcoin halving, block rewards were slashed by 50%, and miner revenues fell 55% in tandem.
The change in market dynamics has forced miners to finance business expenses by offloading more Bitcoin, contributing to additional selling pressure on the token’s price and bolstering its ranging price movement.
Low stablecoin issuance
Stablecoins offer a pathway into digital assets by on-ramping and off-ramping liquidity for the decentralized ecosystem. Tokens like Tether’s USDT and Circle’s USD Coin (USDC) are pegged to the U.S. dollar, providing a non-volatile currency for trading.
Frequent stablecoin issuance usually indicates an influx of capital and liquidity into the cryptocurrency market. However, analysts noted low stablecoin issuance levels. In other words, new capital flowing into digital assets has somewhat stalled with prices.
Crypto ETF outflows
Spot Bitcoin ETFs from firms like BlackRock and Fidelity broke Wall Street records by reaching multiple billions in assets within weeks. Recently, however, the funds have seen outflows, adding more pressure to Bitcoin prices and the broader digital asset market. More than $600 million exited digital asset investment products last week after a hawkish Federal Reserve policy meeting.
Although the market has lulled, analysts opined that a reversal is not out of bounds in the short term. “Historical trends suggest that periods of sustained low miner revenues combined with a high hash rate can indicate a potential market bottom,” said a report.