The price of Bitcoin may have dropped, but there’s a problem: CryptoQuant

Since last weekend, the price of bitcoin (BTC) has risen significantly, indicating that the crypto asset may have bottomed out. Bitcoin has recovered to a high of $67,000, although at the time of writing it was hovering around $64,000. This comes after the incumbents realized their biggest losses to date in 2024.

CryptoQuant analysts said on-chain metrics suggest positive near-term momentum; however, it may not be sustainable as the liquidity of stablecoins and demand for Bitcoin have seen little or no growth.

Bitcoin may have bottomed out

CryptoQuant found that BTC holders realized losses of $2.5 billion in two days last week, shortly before the cryptocurrency rallied and rallied. This could be indicative of seller capitulation, usually associated with low prices.

Another sign that bitcoin may have bottomed out is the easing of selling pressure from major entities, including the German government and the rehabilitation estate of defunct crypto exchange Mt. enjoy The former has run out of BTC to sell, and the latter has moved its holdings to exchanges to begin the process of distribution to creditors.

In addition, unrealized profit margins for Bitcoin traders have reached extremely low levels, the most negative since shortly after the collapse of the bankrupt crypto exchange FTX in November 2022. This figure dropped to – 17% last week and currently stands at -5.7. %. This is usually a sign that prices have bottomed out.

“From a valuation perspective, the price of Bitcoin also appears to have bottomed out and indicators suggest positive momentum. CryptoQuant’s P&L index bounced off its 365-day moving average (red circles), which indicating that the price may have found a local bottom and could continue to rise,” the analysts wrote.

The catch

Although CryptoQuant’s Bull-Bear Market Cycle indicator shows that the market is still in a bullish phase, demand for Bitcoin has yet to start growing again to pave the way for a further price increase that would lead to to new highs. Positive and faster demand growth is needed for a substantial increase; however, the demand for Bitcoin is still below zero.

Likewise, the liquidity of stablecoins, especially Tether’s USDT, has yet to accelerate. Monthly stable currency growth is still close to 0%; faster growth is needed for continued price increases.

CryptoQuant’s analysis aligns with that of Bitfinex, which stated that due to certain factors, BTC could witness more bloodshed in the near term.

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 to Binance (full details).

2024 LIMITED OFFER on BYDFi Exchange – Up to $2888 Welcome Reward, Use this link to register and open a 100 USDT-M position for free!