Bitcoin’s Price May Have Bottomed Out, But There’s a Catch: CryptoQuant

Since the end of last week, the price of Bitcoin (BTC) has risen significantly, suggesting that the cryptocurrency may have bottomed out. Bitcoin has recovered to a high of $67,000, although it was hovering around $64,000 at the time of writing. This comes after holders of the currency suffered their biggest losses so far in 2024.

Analysts at CryptoQuant He said On-chain metrics indicate positive momentum in the near term; however, this momentum may not be sustainable as stablecoin liquidity and demand for Bitcoin have registered little to no growth.

Bitcoin may have hit bottom

Bitcoin holders lost $2.5 billion in two days last week, CryptoQuant found, shortly before the cryptocurrency rallied. This could be a sign of seller capitulation, which is typically associated with falling prices.

Another sign that Bitcoin may have bottomed out is that selling pressure from major entities, including the German government and the Mt. Gox Foundation, has been easing. The German government has run out of bitcoin, and the foundation has moved its holdings to exchanges to begin the distribution process to creditors.

Additionally, unrealized profit margins for Bitcoin traders have hit rock bottom levels, the most negative since shortly after the collapse of the bankrupt cryptocurrency exchange FTX in November 2022. This figure dropped to -17% last week and is currently at -5.7%. This is usually a sign that prices have bottomed out.

“From a valuation perspective, Bitcoin price appears to have bottomed out as well, with indicators pointing to positive momentum. CryptoQuant’s P/E indicator has risen above its 365-day moving average (red circles), suggesting that price may have found a local bottom and could continue to rise,” the analysts wrote.

the hunt

Although CryptoQuant’s Bull and 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 new price surge that would lead to new highs. A positive and faster growth in demand is needed for a significant increase; however, demand for Bitcoin is still below zero.

Similarly, stablecoin liquidity, especially Tether’s USDT, has yet to accelerate. Monthly stablecoin growth is still close to 0%; faster growth is needed to achieve sustained price increases.

CryptoQuant’s analysis is consistent with that of Bitfinex, which stated that due to certain factors, BTC may see more bloodshed in the near term.