Bitcoin price prediction amid disappointing on-chain metrics

The Bitcoin (BTC/USD) price declined on Tuesday as cryptocurrency sentiment soared. The coin declined by more than 1% to $33,000, bringing its total market capitalisation to more than $616 billion. It is about 50% below its all-time high of almost $65,000.

Bitcoin on-chain data

The Bitcoin price is falling as investors wait for the upcoming US inflation data that comes on Tuesday. The numbers are expected to show that headline CPI rose by more than 5% in June while core CPI that excludes food and energy rose by about 5%. These are important numbers because they have an impact on the Federal Reserve’s monetary policy. 

The BTC is also declining as investors wait for the upcoming unlocking of thousands of Bitcoins held by GrayScale, the biggest crypto fund in the world. The unlocking will likely see thousands of Bitcoin holders sell their coins, which will lead to more supplies. 

Meanwhile, on-chain data on Bitcoin are not encouraging. Data compiled by IntoTheBlock shows that the number of large Bitcoin transactions has declined to the lowest level since November 2020. At the same time, the volume of large transactions has also dropped. The number of active Bitcoin wallets and transactions have also dropped. 

Further, trading volume at the biggest cryptocurrency exchanges like Coinbase, Kraken, Binance, and Bitstamp declined by more than 40% in June. This signals that demand for cryptocurrencies is waning. 

This decline happened as China escalated its crackdown on the currencies. It did this by intensifying a crackdown of the country’s miners, which led to a sudden drop of hash rates. The country also directed its banking and other financial organisations to stop accepting and processing cryptocurrencies. In a note, Teddy Vallee of Pervalle Global said:

“The digital asset ecosystem got punched in the face, so it’s currently up against the ropes versus fighting in the middle of the ring. Typically when you have large sell-offs, participants are quite fearful and pull back their chips.”

Bitcoin price prediction

Bitcoin price chart

The four-hour chart shows that the BTC price has been under intense pressure lately. Along the way, the coin has formed a descending triangle whose support is at $32,755. A descending triangle is usually a bearish sign. The BTC has also moved below the 25-day and 50-day moving averages (MA). Therefore, the pair will likely keep falling as bears target the next key support level at $31,000.

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