Bitcoin’s price has hit a low point not seen in a month, dropping to $58.5K this week, according to CryptoQuant, a leading analytics firm. This decline aligns with predictions made in their previous report, which highlighted slow growth in demand for Bitcoin. Despite the cryptocurrency market remaining in a bull phase, it is exhibiting the least bullish sentiment observed since March 2023.
CryptoQuant’s latest report provides detailed analysis of several key on-chain metrics to determine if Bitcoin has reached its price floor and the conditions necessary for a potential recovery. The report emphasizes the crucial role of a resurgence in bullish momentum for prices to bounce back.
In terms of demand dynamics, CryptoQuant notes that Bitcoin demand has seen a slight increase since late May. However, this growth remains lukewarm, highlighting the need for accelerated demand to drive a significant price rally. The report suggests that for Bitcoin prices to experience a strong rally, there needs to be a substantial increase in demand, particularly from U.S. investors. It is worth noting that U.S. investor demand for Bitcoin has recently dipped into negative territory, as indicated by CryptoQuant’s Inter-exchange Flow Pulse indicator. This tool correlates the growth in U.S. investor demand with higher Bitcoin prices.
The liquidity from stablecoins, which is crucial for injecting funds into the market, is also growing at a slower pace. Increased liquidity growth from stablecoins is necessary for a sustainable rally in Bitcoin prices. Additionally, the report identifies $56K as the ultimate support level for Bitcoin, based on Metcalfe’s price valuation bands (red line). This metric previously acted as resistance during the last cycle but served as a strong support level in May. If Bitcoin falls below this threshold, it could indicate a significant market correction.
Tags: BTC
