Bitcoin (BTC) has struggled to maintain its recent recovery, falling to $85,700, which marks its lowest point since April. This decline comes in the wake of mixed employment data from the United States and a diminishing outlook for a Federal Reserve interest rate cut. Analysts from two major financial institutions, JPMorgan and VanEck, have weighed in on the situation, highlighting the factors contributing to this downturn.
According to JPMorgan, the recent drop in Bitcoin can be attributed to significant outflows from spot Bitcoin and Ethereum ETFs. The firm reported that individual investors have sold approximately $4 billion worth of these ETFs in November alone. This trend has been identified as a primary catalyst for the ongoing correction in the cryptocurrency market. While large liquidations seen in October have stabilized, the selling pressure from retail ETF investors has persisted, leading to further declines.
Analysts at JPMorgan, including Nikolaos Panigirtzoglou, noted that retail investors have emerged as the main contributors to the correction this month. They pointed out that in October, cryptocurrency investors were responsible for market volatility due to heavy deleveraging in perpetual futures. However, the current downturn appears predominantly driven by individual investors engaging in spot ETF selling.
In addition to JPMorgan, analysts from VanEck have also assessed the market dynamics. They indicated that the recent sell-off is largely led by medium-term holders rather than long-term investors. The data suggests that addresses that have held Bitcoin for periods of three to five years have accounted for a significant portion of recent sales. Long-term holders, on the other hand, remain largely inactive despite the bearish market sentiment.
VanEck further noted that the balance of Bitcoin in wallets held for three to five years has decreased by 32% over the past two years. This indicates a shift in investor behavior rather than a mass capitulation. Additionally, open interest in BTC perpetual futures has declined by 20% since October 9, with funding rates now reflecting bear market conditions.
Analysts at VanEck predict that the combination of long-term holders sticking to their HODL strategy, the rotation of investors, and the capitalization of futures traders has placed Bitcoin in a “reset” phase, potentially setting the stage for a future recovery.
In summary, the recent trends in Bitcoin trading highlight the significant impact of retail investor behavior and ETF dynamics on the cryptocurrency market. As the market continues to navigate these challenges, the potential for recovery remains a key point of focus for analysts and investors alike.
