As Bitcoin hovers around $61,000, analysts are closely monitoring various on-chain metrics to determine if the leading cryptocurrency has bottomed out and if a rally is on the horizon. The latest weekly report from CryptoQuant highlights key indicators, such as bullish momentum, BTC demand growth, and stablecoin liquidity, that could potentially signal a market turnaround.
CryptoQuant’s Bitcoin Bull-Bear Market Cycle indicator is currently showing the least bullish state since March 2023, coinciding with the US banking crisis. For prices to recover, the indicator needs to rise above its 30-day moving average. Additionally, Bitcoin demand growth must accelerate to levels seen in the first quarter of the year when US spot Bitcoin ETFs were launched to boost market sentiment.
One key signal that Bitcoin may have bottomed out is an increase in buying activity from permanent BTC holders. Despite a monthly purchasing pace of 72,000 BTC, this is still below the Q1 rate of 160,000 BTC. While there has been a slight recovery from the May rate, sustained and higher purchases are necessary for prices to regain their upward momentum.
Bitcoin’s ultimate price support level is currently identified at $56,000 based on Metcalfe price valuation bands from previous cycles. Any decline below this critical support level could trigger a major market correction, erasing additional value. Therefore, monitoring price movements around this level will be crucial in determining whether Bitcoin has indeed bottomed out.
Traders’ on-chain unrealized profit margins becoming positive could potentially signal incoming price rallies. An increase in Bitcoin flow from other exchanges to Coinbase indicates growing demand from US investors, often leading to higher prices. This trend is closely watched as it usually correlates with positive market sentiment and potential price appreciation.
Lastly, an acceleration in stablecoin liquidity, particularly in the 60-day growth of Tether’s market cap, signifies an influx of capital into the market. This metric is essential for fueling price movements upwards. Keeping an eye on the growth of stablecoin liquidity can provide insights into the overall health of the market and the potential for price recovery.
Monitoring these key on-chain metrics can provide valuable insights into the current state of the cryptocurrency market and potential price movements for Bitcoin. As investors navigate through market volatility, understanding these indicators becomes crucial in making informed decisions and seizing opportunities for profit in the ever-evolving crypto landscape.
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