Bitcoin’s price has hit a new low, dropping to $58.5K this week, according to leading analytic firm CryptoQuant. This decline aligns with their previous report, which highlighted slow demand growth for Bitcoin. Despite the overall bullish phase of the cryptocurrency market, there is a notable lack of bullish sentiment, the lowest observed since March 2023.
CryptoQuant’s latest report provides detailed insights into on-chain metrics that determine whether Bitcoin has reached its price floor and the necessary conditions for a potential recovery. The report emphasizes the significance of a resurgence in bullish momentum for prices to bounce back.
In terms of demand dynamics, CryptoQuant states that Bitcoin demand has seen a slight increase since late May. However, the growth remains limited, emphasizing the need for accelerated demand to drive a significant price rally. The report suggests that for Bitcoin to experience a robust rally, there needs to be a substantial increase in demand, particularly from U.S. investors. Interestingly, U.S. investor demand for Bitcoin has recently fallen into negative territory, according to CryptoQuant’s Inter-exchange Flow Pulse indicator. This tool correlates U.S. investor demand growth with higher Bitcoin prices.
The growth of liquidity from stablecoins, which is crucial for injecting funds into the market, is also slowing down. 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