Analysis: Bitcoin's narrow fluctuation between $59,000 and $60,000 raises concerns, increasing the likelihood of a drop to $40,000

According to Odaily Planet Daily, Bitcoin (BTC) has been trading narrowly between $59,000 and $60,000 for the fifth consecutive day. However, analysts warn that this "calm" market condition may conceal greater risks, with the key issue being that the current consolidation is occurring within a downtrend.

FxPro Chief Market Analyst Alex Kuptsikevich stated that the current price action resembles Bitcoin's consolidation phase between $55,000 and $70,000 from March to October 2024, but the context is different. The previous consolidation took place in an uptrend, whereas this fluctuation is occurring below support levels. Additionally, both the 50-day and 200-day moving averages are trending downward, indicating the market remains bearish.

Kuptsikevich pointed out that if this consolidation pattern breaks to the downside instead of forming a base for a rebound, Bitcoin's next significant support zone could be around $40,000.

On-chain data also signals pressure. CryptoQuant analyst Darkfost noted that long-term holders may be exhibiting loss-making selling behavior. Historically, this phase in the cycle is often accompanied by short-term pressure but could also present a long-term buying opportunity.

Meanwhile, market demand remains relatively weak, with active address counts and on-chain transaction activity at recent lows. Concerns are further heightened by the financial pressure on corporate Bitcoin giant Strategy, whose preferred stock STRC recently fell to around $71, with its common stock declining approximately 25% over the past week, hitting its lowest level since February 2024.

Strategy previously indicated it might sell over $1 billion of its Bitcoin reserves to improve its financial position, which is seen as a significant shift from founder Michael Saylor's "never sell" strategy.

Additionally, the strengthening US dollar and sustained capital flows into US stock AI-related assets are exerting pressure on dollar-denominated risk assets like Bitcoin. BTC is currently on track to end the second quarter with a quarterly decline of approximately 13%, while US stocks remain strong due to the AI investment boom. (CoinDesk)