Bitcoin Price Loses Momentum As Miner Profits Decline And Spot BTC Outflows Persist

Bitcoin has experienced a significant decline of over 10% in the past two weeks.

Source:www.coinkolik.com

Bitcoin's price fell from $64,190 to $57,800 over the 10-day period ending on September 3. This sharp drop contrasts with the performance of traditional assets, as the S&P 500 index remains only 2% below its all-time high and gold is trading just $50 away from its historical peak. While some investors attribute Bitcoin's recent slump to the broader macroeconomic environment, other factors are also at play. The combination of reduced miner profitability, regulatory uncertainties, and shifting market sentiment is pushing Bitcoin's price below the $59,000 mark. This multifaceted situation highlights the complex interplay of elements impacting the cryptocurrency market and suggests that Bitcoin's current challenges extend beyond simple market fluctuations.

Macroeconomics Are Bearish But Traders Sense A Trend Change

Trader notes that Bitcoin has been affected by recession fears in the United States, but this trend is stabilizing as attention shifts to monetary policy and the performance of the US dollar. The bullish narrative for Bitcoin going forward will rely on expectations of a looser Federal Reserve policy, including potential interest rate cuts. Traders anticipate that the US may implement expansionary measures to stimulate the economy.

In addition to movements in the stock market and gold, traders have been accumulating US government debt. The 2-year Treasury yield dropped to 3.88% on September 3, down from 4.06% two weeks prior, indicating that investors are accepting lower returns for what is considered a safer asset. This trend reflects uncertainty in the job market, with July's data showing a slowdown and unemployment reaching 4.3%. While the US central bank has managed to reduce inflationary pressures, with the CPI slowing to 2.9% in July the lowest rate since March 2021 rising jobless claims could hinder the likelihood of a total 0.75% interest rate cut by year-end. Currently, the market anticipates a 74% chance that FOMC rates will fall below 4.50% by December 18, though this could change if macroeconomic data shifts.

The next jobs report, scheduled for September 6, is expected to reveal that the US economy added 185,000 jobs in August. This outcome could support a 0.25% interest rate cut by the Federal Reserve, according to economists at Morgan Stanley and Yahoo Finance. Skepticism among traditional finance investors was evident when Nvidia reported earnings that exceeded expectations but still saw a 6% drop in its stock during the following session. Despite these factors, Bitcoin's underperformance compared to other markets, such as the Russell 2000 index of US-listed small-cap companies, which has remained relatively flat over the past ten days, remains unexplained.

Spot Bitcoin ETF Outflows And Declining Mining Profitability Weigh On Investor Sentiment

Part of the concern stems from ongoing pessimism driven by outflows from spot Bitcoin ETFs. As these funds fail to attract new inflows, they increasingly draw negative attention. Between August 27 and August 30, spot Bitcoin ETFs experienced $480 million in net outflows, effectively offsetting the $455 million in inflows from the previous two days, according to Investors' data. Although this trend is not unusual and does not necessarily reflect a shift in the overall perception of Bitcoin’s utility and value, the negative headlines can prompt traders to question whether savvy investors expect further declines in Bitcoin's price.

Additionally, Bitcoin investors are worried about declining miner profitability, which is approaching all time lows and could potentially lead to a sell off. Currently, miners hold over 1.8 million BTC, a figure that has remained relatively stable over the past two months. This concern is amplified by the recent drop in Bitcoin’s hashrate index, which measures expected earnings from a given amount of mining power hashrate.

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