Analysts cited by CryptoQuant theorized that the recent market-wide weakness has triggered a bottoming out.
The overall cryptocurrency market has fallen by over 7% in the past week and over 3% in the past month, with Bitcoin (BTC) notably dropping below the $65,000 mark and altcoins suffering major corrections.
Altcoins, which are typically more volatile than Bitcoin, have fared worse than the major cryptocurrency, losing over 4% of their market cap in the past 30 days. While BTC has fallen around 3% in the same period, the token appears to be trending sideways.
Miners' Surrender
A report from CryptoQuant points out that miner capitulation is the main reason for the market capitalization dropping to $2.4 trillion. After Bitcoin's halving, block rewards were cut by 50%, and miner revenues fell by a corresponding 55%.
The shifting market dynamics have forced miners to sell more Bitcoin to cover their operating expenses, further increasing selling pressure on the token's price and widening price volatility.
The amount of stable coins issued is small.
Stablecoins provide a pathway into digital assets by on-ramping and off-ramping liquidity in decentralized ecosystems. Tokens such as Tether’s USDT and Circle’s USD Coin (USDC) are pegged to the US Dollar, providing a volatile currency for trading.
Frequent stablecoin issuances are usually an indication of capital and liquidity inflows into the cryptocurrency market. However, analysts have noted low levels of stablecoin issuance. In other words, the inflow of new capital into digital assets has been somewhat stagnant, along with their prices.
Cryptocurrency ETFs Leaking
Bitcoin spot ETFs from companies like BlackRock and Fidelity have smashed Wall Street records by reaching billions of dollars in assets in a matter of weeks. However, recent outflows from these funds have put further pressure on Bitcoin prices and the overall digital asset market. More than $600 million was withdrawn from digital asset investment vehicles last week following a hawkish Federal Reserve policy meeting.
Despite the market calm, analysts say a reversal is possible in the short term: “Historical trends suggest that sustained periods of low miner revenues and high hash rates could signal a potential market bottom,” the report said.
