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Bitcoin (BTC) dropped to local lows of $33,750 on June 20 as fears over weak support levels proved to be well founded.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD swiftly dropping below $34,000 on Sunday after choppy behavior at the start of the weekend.
A comedown from resistance at near $40,000 continued to unfold, with low volumes highlighting little interest in protecting price action much above $30,000.
Orderbook data from Binance confirmed this on the day, with sellers eradicating a major buy wall above $36,500 to leave the next significant support level at just $31,000.
BTC/USD buy and sell orders on Binance as of June 20. Source: Material Indicators/ Twitter
Among traders, talk mostly revolved around the so-called “death cross” on the BTC/USD daily and hourly charts which occurred on Friday. This refers to the 50-day moving average crossing over the 200-day moving average, and is traditionally considered to be a bad omen for price stability.
Historically, not all death crosses have resulted in losses — as Cointelegraph reported, some are followed by bullish phases.
“A death cross is overrated,” popular trader Crypto Ed summarized earlier in the week.
“The only thing it’s telling you, is that you are very late when opening shorts. Most of the down moves already happen before the cross.”
In a separate commentary, Adam Back, CEO of Blockstream, likewise took Twitter users to task over the negative skew given to death cross events.
BTC/USD 1-day candle chart with “death cross” shown. Source: TradingView
At the time of writing, however, Bitcoin nonetheless traded down 5% on the day, while 3-day losses totaled over 14%.
Liquidations were mounting on exchanges, with almost $150 million of positions gone in just a single hour after a flash dip of around $800.
Grayscale investors get a sell opportunity
Another theory about price direction involved an impending “unlocking” phase at institutional giant Grayscale.
As Cointelegraph previously noted, the coming weeks will see a large chunk of investor funds released after a 6-month lock-up period, with the potential for selling pressure to therefore increase as accredited investors seek to offset some of their losses (realized after selling their GBTC shares) by selling BTC on the spot market.
“Between mid-April 2021 to today there have been 139.5K BTC (GBTC) in unlockings,” explained Decentrader analyst Tonald Dusk.
“I anticipate price to decline again in mid-July as there remains a further 140K GBTC to be unlocked.”
Thereafter, by contrast, there should be a reduction in potential sell-side activity after the summer — at least from GBTC — if these unlockings have indeed put downward pressure on price since the mid-April all-time highs.
Grayscale unlocking events chart. Source: BybtFundamentals see increasing retracement
A look at network fundamentals meanwhile gave additional cause for concern. Hash rate, already in flux thanks to shifts in miner distribution, fell below 100 exahashes per second (EH/s) having previously hit a peak of 168 EH/s.
Related: Bitcoin may lose $30K price level if stocks tank, analysts warn
Other estimates, while not exact, also depicted the hash rate downtrend.
Bitcoin 7-day average hash rate chart. Source: Blockchain
Difficulty, fresh from two consecutive downward adjustments, was on track for a third leg down of around 9.7% at the next in around nine days’ time.
The last time that Bitcoin saw three downward difficulty adjustments in a row was during the capitulation phase of the previous bear market in late 2018.
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