Bitcoin (BTC) on the way to its worst quarter since 2018: are the bears winning?

Bitcoin appears to be heading for one of the worst quarters it has seen since the start of 2014.

A 46% drop since April 2020

Even the most optimist adepts of crypto have to admit that Bitcoin has not been on top of the game in recent months.

Based on data provided by an aggregator Skew, we can see that Bitcoin has dropped by almost 46% since the beginning of the quarter. This is its weakest performance since Q1 2018 when Bitcoin shed approximately 50% of its value.

Since the beginning of 2019, Q2 2021 is just the fourth quarter that has seen a drawdown for Bitcoin’s value, with BTC price falling by 10.6% during Q1 of 2020, by 13.6% in Q4 2019, and 21.5% in Q3 2019. So, the current price correction is far more substantial.

Bitcoin whales offloading BTC

According to CoinShares’ 21st June Digital Asset Fund Flows weekly report, institutional investors have continued to offload Bitcoin exposure for the sixth consecutive week, with BTC tracking investment products experiencing $89 million (~£63.7 million) in outflows over seven days. They also offloaded $79 million (~£56.5 million) in other cryptocurrencies last week.

While market flows are often influenced by institutional investors, they are not alone in reducing their Bitcoin exposure. According to Glassnode, Over the Counter (OTC) trading desks and miners are also offloading coins. In fact, recent news from China about the authorities’ banning mining activities have made them sell more, while BTC holdings on OTC desks reach their new lowest level since March 2020.

A prime opportunity for long-term investors?

While this marked price correction is perceived by some as the end of cryptocurrencies’ era, others take advantage of it to strengthen their positions at more attractive levels, podcaster Anthony Pompliano with a million of his followers among them. Pompliano has tweeted about the good side of the said drop, notably the opportunity to use a Dollar Cost Average strategy. Protecting himself against possible backlash, he though mentioned that he had ‘no clue where the price of Bitcoin is going in the short term’, an implicit way of saying the well-known ‘this is not financial advice’ disclaimer.

Glassnode points out that long-term holders – Bitcoin addresses that historically don’t sell the coins they accumulate – have significantly increased their holdings since BTC’s all-time heights.

Bitcoin wicked below $30,000 yesterday, only to shoot up to $34,000 just a little bit later. Has the storm passed, or has it been no more than a light shower? With less than seven days before the quarter closes, will we see a shorter red candle and a new jump-start in July? Sorry, I don’t have a crystal ball.

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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
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