Bull or bear phase? CryptoQuant says Bitcoin is at a turning point

Bitcoin (BTC) is currently at a critical point that could determine whether its price will bottom out or fall further in a correction like the one seen in the summer of 2021.

While some metrics suggest that the leading crypto asset has bottomed out of its latest correction, others indicate that there could be more bloodshed and pain for market participants.

Bitcoin at the pivot point

CryptoQuant’s latest weekly crypto report says that it may take a little longer for the price of bitcoin to rally or fall, as stablecoin liquidity growth is not yet in full swing. Historically, prices rise when more liquidity enters the crypto market through the minting of Tether (USDT). However, this condition has yet to be met as USDT’s market cap growth is still slowing down.

On the other hand, the market capitalization of USD Coin (USDC) has grown by 5.6% monthly. Regardless, Tether’s slow growth indicates that BTC may not rally anytime soon.

CryptoQuant analysts further revealed that the platform’s Profit and Loss Index signal is above its 365-day moving average; a drop below this level is often related to major corrections or the start of a bear market.

Additionally, CryptoQuant’s bull-bear market cycle indicator could switch to a bear market if prices fall further. It has been at its lowest bullish level since early 2023, and a bearish reversal could lead to further declines in the near term.

Investors are realizing losses

On the contrary, big bitcoin investors are realizing losses. Since BTC plummeted to a four-month low of $53,000 about a week ago, new big investors have racked up nearly $1 billion in losses. Investors selling their holdings at a loss usually means a low price.

Margins for bitcoin traders are also negative, and this cohort of investors will only make losses if they continue to unload their holdings. Traders’ unrealized margins are currently at 17%, the most negative since the collapse of bankrupt crypto exchange FTX in November 2022.

It is also worth mentioning that bitcoin whales and large investors are increasing their holdings at a rate of 6.3% month-to-month, the fastest rate since April 12th. This is a sign of the growing demand for bitcoins, which usually positively affects prices.

Although miners are still capitulating, it remains to be seen which direction BTC will go.

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