The Nasdaq Composite Index continues its winning streak, breaking a record for the seventh consecutive day.
The Dow Jones Industrial Average and S&P 500 are also higher, boosted by growing investor interest in chipmaker Nvidia and artificial intelligence. However, Bitcoin, the world’s largest cryptocurrency, continues to decline.
Here are four factors that could hold back the price of Bitcoin, according to analysts.
“Bitcoin is taking a breather”
Bitcoin is holding its breath after a strong start to the year, according to Adam Morgan McCarthy, an analyst at crypto data and analytics firm Kaiko Research. While the Nasdaq is up 18% this year, Bitcoin is up 53%. McCarthy notes that Bitcoin’s movements are driven by several factors.
“Bitcoin has had a very strong start to the year, driven in particular by regulatory developments in the US,” McCarthy said, adding: “The next drivers for Bitcoin will be the long-term impact of the recent halving and demand for ETFs.”
“BTC Halving Incident”
The fourth BTC halving, which occurred in mid-April, halved the amount of Bitcoin rewards miners receive for maintaining the blockchain. This decrease in supply is generally expected to push prices higher. However, the effects of a halving usually take several months to manifest and are most visible when demand for BTC increases.
“Demand for ETFs in the U.S. could have a big impact in the coming months as more advisors and firms sign up new investors,” McCarthy added.
ETF outflows
Last week saw the worst outflow from spot Bitcoin exchange-traded funds (ETFs) since March, totaling $620 million. These short-term outflows have contributed to negative market sentiment, negatively impacting Bitcoin’s price action.
However, the upcoming launch of Ethereum ETFs and recent positive macroeconomic data suggest that BTC and other major crypto assets may soon reverse their trends and reach new cyclical highs.
Mt.Gox Payments
Once the world’s largest cryptocurrency exchange, Mt. Gox has cast a long shadow over the industry since its collapse following a hacking attack in 2014. About $9.2 billion worth of Bitcoin is sitting in bankruptcy and waiting reimbursement to creditors.
With the deadline for redemptions set for October 31, the market may be waiting for these redemptions to happen. David Duong, head of research at cryptocurrency exchange Coinbase, recently said that a mass Bitcoin redemption event is unlikely. However, concerns over these redemptions may still limit liquidity as market participants may refrain from deploying new capital amid uncertainty.
BTC miners
Bitcoin miners are also putting pressure on the price of BTC. The increased supply could contribute to Bitcoin’s current price stagnation as miners sell their holdings.
*This is not investment advice.
