3 reasons why Bitcoin price is stuck at $30K

3 reasons why Bitcoin price is stuck at $30K

The Factors Keeping Bitcoin Price “Stuck” at $30,000

Bitcoin STH supply annotated chart. Source: CryptoQuant

Bitcoin (BTC) has been hovering around the $30,000 mark for nearly a month, and according to new analysis, this is not a mere coincidence. On-chain analytics platform CryptoQuant recently highlighted three key factors that are keeping the price of BTC in the same range.

Speculative Trading: Short-term Holders Selling Off

Bitcoin has been resistant to any breakout attempts for weeks, briefly reaching one-year highs before quickly falling back down. This trend, according to CryptoQuant contributor Axel Adler, can be attributed, among other things, to speculative trading.

Adler points out that short-term holders (STHs), who hold coins for six months or less, have been actively divesting themselves of their BTC holdings since April. This increased selling pressure from STHs has been exerting significant influence on the market, as they lock in their profits by liquidating their assets.

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Bitcoin miner exchange inflow realized price annotated chart. Source: CryptoQuant

Miner Selling Ahead of the Halving Event

Another factor affecting the current price performance of Bitcoin is the selling of BTC by miners. With the recent surge in BTC prices, miners have been selling their reserves to cover expenses ahead of the block subsidy halving event scheduled for 2024.

Adler explains that this selling activity is not random but rather connected to the upcoming halving event. As the reward for mining Bitcoin decreases by half, miners need liquidity to invest in new equipment to stay competitive. The peak sales observed in the past year highlight the significance of this factor.

Low Volatility and Slowed Trading Activity

Bitcoin’s volatility has been relatively low compared to historical levels. Since April, there has been a net slowdown in trading activity as traders and investors hope for a more substantial breakout in the future.

According to the Bitcoin historical volatility index chart, the volatility index stands at 14.77 as of July 18, which is significantly lower than its peak in 2023. This low volatility indicates a lack of significant price movements and contributes to the “stuck” price range.

Bitcoin historical volatility index chart. Source: TradingView

The Current Picture and Future Outlook

All these factors together present the current picture of the Bitcoin market, where the price appears to be “stuck” within a narrow range. However, as with any cryptocurrency, market conditions can change rapidly, and it is crucial for investors and traders to closely monitor on-chain metrics to stay informed about market changes.

In conclusion, the price stagnation of Bitcoin at around $30,000 can be attributed to speculative trading, selling pressure from short-term holders, miners liquidating their reserves, and low volatility. While the current market conditions may seem uneventful, it is essential to remain vigilant and stay informed about potential market changes that can occur swiftly in the world of cryptocurrencies.

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