Why is Bitcoin Price Down Today?
On June 21, Bitcoin experienced a 2.30% drop, reaching $63,500, its lowest level in over a month. This decline is attributed to outflows from Bitcoin’s spot exchange-traded funds (ETFs) and a noticeable decrease in Bitcoin market dominance as altcoins gained traction.
Spot Bitcoin ETFs Outflows Resume
Bitcoin’s price decline follows days of outflows from its U.S.-based spot ETFs. These investment vehicles have seen nearly $500 million in withdrawals since June 10. These ETF outflows coincide with a rise in the U.S. dollar’s strength against a basket of top foreign currencies, indicating a growing risk-off mood among investors. This follows mixed macroeconomic data from the U.S. and the Federal Reserve lowering its likelihood of rate cuts from four to just one in 2024. A higher interest rate scenario reduces the opportunity cost of holding riskier assets like cryptocurrencies, contributing to Bitcoin’s recent price decline.
Bitcoin’s Market Dominance Slides
Bitcoin’s losses today also coincide with its declining share in the crypto market. The Bitcoin Dominance Index (BTC.D), which measures BTC’s market capitalization versus the rest of the crypto market, dropped 0.55% to 55.14% on June 21, continuing its decline from a local top of 56.29% established three days ago. Investors have rotated their capital out of the Bitcoin market to seek opportunities in altcoins, particularly following the U.S. Securities and Exchange Commission’s (SEC) decision to end its investigation into Ethereum, the leading altcoin by market capitalization.
These trends are also visible among institutional investors. The CoinShares weekly report shows investors withdrawing capital from Bitcoin-based investment funds but increasing their exposure to altcoins, particularly Ether. According to CoinShares, “The outflows were entirely focused on Bitcoin, seeing $621 million outflows, the bearishness also prompted $1.8 million inflows into short-bitcoin.”
BTC Price: Technical Correction?
Bitcoin’s losses today are part of a broader correction within its prevailing bull flag pattern. Bull flags are bullish continuation patterns characterized by two downward-sloping, parallel trendlines following a strong upward move. According to technical analysis, the pattern resolves when the price breaks above the upper trendline and rises by as much as the height of the previous upside move.
As of June 21, BTC’s price was pulling back after testing the upper trendline of its bull flag pattern, eyeing a further drop toward the lower trendline below $60,000, which it may hit by the end of June. Nonetheless, Bitcoin’s overall bias remains skewed to the upside, targeting a breakout above the flag’s upper trendline at around $72,000. If the technical pattern plays out as intended, BTC’s bull flag target will be around $88,000 by July or August.
