Bitcoin
Has Bitcoin bottomed? Here’s how to tell
Analysts at market intelligence platform CryptoQuant have outlined on-chain metrics that could indicate that the price of bitcoin (BTC) has bottomed out and cryptocurrencies are starting to recover again.
CryptoQuant’s latest weekly report mentioned signs such as increased bullish momentum, increased demand for BTC, and faster stablecoin liquidity growth as metrics to watch.
Biggest bullish momentum
CryptoQuant’s Bitcoin Bull-Bear Market Cycle Indicator currently signals that the crypto market is at its least bullish since March 2023, when the US banking crisis occurred.
With BTC hovering around $61,000 at the time of writing and having fallen to a one-month low of $58,500 earlier this week, the market needs a bullish boost for prices to recover . This means that CryptoQuant’s Bull-Bear Market Cycle indicator needs to rise above its 30-day simple moving average.
Furthermore, demand growth for Bitcoin needs to accelerate to levels seen in the first quarter of the year for prices to recover. While demand growth has recovered somewhat since May, it is still significantly slow compared to the rate seen earlier in the year, when U.S. spot Bitcoin exchange-traded funds (ETFs) were released.
Increased purchases by permanent Bitcoin holders could signal that the price of the leading digital asset has bottomed out. Currently, this group of investors is purchasing BTC at a monthly pace of 72,000 BTC, a far cry from Q1’s monthly pace of 160,000 BTC. Although the pace has recovered slightly from the May rate of 68,000 BTC, much higher purchases are needed for prices to regain upward momentum.
A possible important correction
Bitcoin’s final price support level is $56,000, based on Metcalfe’s price assessment ranges, which marked resistance and upper levels in the previous cycle. Any drop below this support level could trigger a major correction that would wipe out even more value from the market. Consequently, this level could determine whether Bitcoin has bottomed out or not.
Additionally, unrealized profit margins on the traders’ network turning positive could signal further recoveries. An increase in Bitcoin flows from other exchanges to Coinbase signals an increase in Bitcoin demand from U.S. investors, which often correlates with higher prices.
Finally, an acceleration in stablecoin liquidity, often seen in the 60-day growth of Tether’s (USDT) market cap, indicates an influx of capital into the market – a crucial metric needed for prices to move north.