Will Bitcoin's historic $60K support hold?

Market overview

The crypto market capitalisation has lost 12.5% over the past seven days. However, the sharp sell-off that began in June paused on Friday near the $2.05T level, and the market has now rebounded to $2.16T at the time of writing.

At the end of last week, Bitcoin fell below the 200-week moving average and the $60K round figure. At present, bulls are hopeful they have halted the decline below the historical support level that paused selloffs during the bear market of 2017–2020. Later, in 2022–2023, the price dipped as much as 30% below this line, but there was a clear increase in buying on dips. Clearly, optimists are trying to seize the chance to buy the leading cryptocurrency for less than half the price reached between July and October last year.

The sentiment index plummeted to 8, once again showing single-digit values on Monday, following a two-month hiatus and failed attempts to consolidate in positive territory. Judging by the dynamics near Bitcoin’s 200-week moving average and the sentiment index, the situation resembles mid-2022. Under similar conditions at that time, the downward momentum weakened, but a full-fledged reversal did not occur until many months later. 

News background

On Friday, Bitcoin fell below the $60K mark for the first time in 20 months amid a slump in US stock indices. The tech-heavy Nasdaq-100, which BTC often correlates with, plummeted by nearly 5% on Friday following the release of strong US labour market data.

Outflows from US spot Bitcoin ETFs have continued to accelerate for a fourth week, reaching a record $1.72 billion. Outflows from US spot Ethereum ETFs have persisted for four consecutive weeks. Net weekly outflows from ETH ETFs exceeded $170 million.

The crypto market is experiencing not just a crash, but a ‘loss of faith’ and a systemic crisis of the narratives on which it has been built over the last 10–15 years, according to Bloomberg. The notion of Bitcoin as a hedge against inflation has been called into question, and the arrival of institutional players has stripped the industry of its aura as a revolutionary technology.

The number of active addresses on the Bitcoin network has fallen to a seven-year low, notes Bitcoin Magazine. BTC user activity has been declining for several years due to intensifying competition from other layer-one networks used for payments with stablecoins.

The number of Bitcoin millionaires in dollar terms fell by 29% to 111,659 during Donald Trump’s second presidential term, according to figures from BitInfoCharts. This was largely due to a drop in BTC’s market value and does not necessarily reflect sales of the asset.

The privacy-focused cryptocurrency Zcash plummeted by 50% after a critical vulnerability was discovered, allowing fake coins to be created indefinitely and undetected. Zcash developers have fixed the vulnerability and claim that it was unlikely to have been exploited, as it was too complex to detect. 

Summary: Bitcoin rebounded after falling below $60K and the 200-week moving average, but record outflows from ETFs and a slump in sentiment suggest the market remains under significant pressure.