The recent downtrend in Bitcoin's price, reaching a new monthly low near $61K, has sent ripples across the investor and trader community. Unveiling the reasons fueling this price plunge is vital for all stakeholders in the market. Multiple factors have orchestrated this decline, encompassing miner behaviors, Federal Reserve strategies, dwindling inflows, and market signals. This article dissects the pivotal elements steering this bearish trajectory.

BTC Miners’ Significant Sales

The downturn in Bitcoin's price is significantly linked to miners. Notably, there has been a surge in selling originating from older wallets predominantly controlled by miners. This pattern emerges post the recent Bitcoin halving, which slashed daily production from 900 to 450 Bitcoins.

A recent market analysis by QCP Capital spotlighted that Bitcoin miners face notable selling pressure post-halving due to escalated break-even prices. Miner-held Bitcoin reserves have plummeted to a 14-year low, with total holdings diminishing by 50,000 units since the year's commencement. In the ongoing month, miners have offloaded over 30,000 BTC, valued around $2 billion. This extensive selling mostly occurred on exchanges, directly influencing the price downturn.

Further exacerbating this situation was the German government's transfer of $600 million worth of Bitcoin to exchanges, with a $200 million sell-off on a single day. Holding around $3 billion in Bitcoin, this abrupt selloff driven by financial exigencies amidst economic strains is atypical.

Federal Reserve's Liquidity Reversal Impact

An essential factor contributing to Bitcoin's price slump is the recent liquidity reversal by the Federal Reserve. Historically, Bitcoin's price has closely mirrored the Federal Reserve's liquidity dynamics. When the Federal Reserve injects liquidity, Bitcoin tends to benefit from enhanced capital inflows, but withdrawal of liquidity typically exerts downward pressure on Bitcoin's price.

The recent negative turnaround in the Federal Reserve's liquidity over the past fortnight directly impacted Bitcoin's price. Diminished liquidity in the market implies reduced capital for investing in risk assets such as cryptocurrencies. BTC spot and derivatives traders are echoing bearish sentiments, focusing on U.S. PCE inflation data and monthly options expiry.

Diminished ETF Inflows for Bitcoin

U.S.-listed spot Bitcoin (BTC) ETFs reported five consecutive days of outflows, totaling over $900 million in a week. Grayscale's GBTC and Fidelity's FBTC experienced substantial outflows of $53 million and $51 million, respectively. BlackRock's IBIT saw slight inflows of $1 million, while other ETFs exhibited negligible net activity. Total trading volumes amounted to $1.1 billion per SoSoValue data.

A crucial factor contributing to Bitcoin's recent price drop is the dearth of fresh capital inflows. Bitcoin ETFs, instruments tracking Bitcoin's price, have witnessed continual outflows over the recent week, indicating investors withdrawing funds, intensifying selling pressure on Bitcoin.

Historical Pattern in Bitcoin's Performance

An interesting observation is Bitcoin typically hitting a bottom in June over the preceding years. From 2020 onwards, June has tended to mark Bitcoin's bottom, indicating a potential repetition of this pattern.

While Bitcoin has consistently bounced back post-bottoming in the past, this time might mirror a similar trend.

Future Outlook for BTC Price

Bitcoin's descent below the $64,500 support triggered a robust bearish momentum on the price chart. Consequently, the price breached several Fib levels, dropping from $61K in recent hours. Currently, BTC's price hovers at $60,800, reflecting a 5.2% decline in the last 24 hours.

To reclaim authority, bulls must steer the price above the moving averages, potentially propelling the BTC/USDT pair towards $63K and subsequently $64,500, albeit encountering formidable resistance around $65K-$66K. Failure to sustain prevailing levels or the moving averages would indicate prolonged bearish sentiment, potentially instigating a deeper correction below $60,000. On the 4-hour chart, bulls are attempting a recovery amid resistance at the 20-EMA, while sellers vigorously defend the price, aiming for an immediate correction below the $60K mark amidst rising selling pressure.