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Key Reason Why Bitcoin (BTC) Is Struggling Now

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Fri, 14/06/2024 - 13:02
Key Reason Why Bitcoin (BTC) Is Struggling Now
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The post-FOMC state of the market reveals the current struggle of Bitcoin miners, who are massively capitulating and closing their positions. Such a tendency could become shock therapy for the market, highlighting underlying issues that are affecting Bitcoin's recovery.

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Despite equities showing strong momentum, BTC is failing to gather any upward momentum. The key reason for divergence can be attributed to post-halving capitulation by BTC miners that, in essence, is capping the price at this level. Increasing the costs of operations and lower reward structures results in massive sell-offs by BTC miners, laying on bearish pressure and not allowing the BTC to catch up with good signals on the broader financial markets.

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Bitcoin/USD Chart by TradingView

It is further worsened by the extent that Flowbank, a bank featuring a tri-party agreement with Binance, is in bankruptcy proceedings. Generally speaking, this development complicates market dynamics for Bitcoin even more.

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We are in for basically a quiet summer, with no clear catalyst to drive the market either way and a lower volatility environment. Gary Gensler of the SEC has given a signal that a spot ETH ETF might get approved toward the end of the summer, but that would not be an immediate catalyst for BTC. The market is just in a holding pattern, waiting for significant news or events to guide it.

This makes it a strategic window for Ethereum, or ETH, traders. With ETH volatility at a 10 vol premium to BTC and the spread likely shrinking on ETH overwriters returning and anticipating ETH spot ETF approval, this quiet summer may be a good time to be involved in accumulation trades for ETH and a strategic redistribution of risks, to avoid complications in periods of high volatility.

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