Bitcoin is currently at a crucial point where its price could either stabilize or continue to drop, similar to the correction experienced in the summer of 2021. Different indicators suggest varying outcomes for the leading cryptocurrency.
According to CryptoQuant’s latest report, bitcoin’s price might not see a significant rally or bottom out soon because the growth in stablecoin liquidity, particularly Tether (USDT), has been slow. Historically, bitcoin prices tend to rise when more liquidity enters the market through USDT minting, but this condition has not been met yet due to the sluggish growth in USDT market cap.
On the other hand, the market cap of USD Coin (USDC) has been increasing steadily by 5.6% monthly. However, the slow growth of Tether indicates that bitcoin may not experience a rally in the near future.
The Profit and Loss Index signal from CryptoQuant is currently hovering above its 365-day moving average, which could potentially lead to major corrections or the beginning of a bear market if it drops below this level. Additionally, the Bull-Bear Market Cycle Indicator is at its lowest bullish level since early 2023, signaling a possible shift to a bear market if prices continue to decline.
Interestingly, despite the negative market sentiment, large bitcoin investors have been realizing losses, with nearly $1 billion in losses recorded since BTC hit a four-month low of $53,000. This could indicate a potential price bottom as investors tend to sell at a loss during market downturns.
Moreover, bitcoin traders’ margins are currently negative, with unrealized margins at 17%, the most negative since the collapse of the crypto exchange FTX in November 2022. If traders continue to sell at a loss, it could further impact the market.
On a positive note, bitcoin whales and large investors are increasing their holdings at a rate of 6.3% month-on-month, the fastest pace since April 12. This uptick in demand could potentially have a positive effect on bitcoin prices.
While miners are still capitulating, the direction of bitcoin remains uncertain. It will be interesting to see how these different factors play out and influence the future price movement of bitcoin.