The cryptocurrency market is currently experiencing a downturn, with both bitcoin (BTC) and altcoins seeing significant losses. BTC is struggling to maintain its value and is currently trading below the on-chain realized price of $65,800.
Despite the bearish trend, analysts at CryptoQuant are still optimistic, suggesting that the market is in a bull cycle. However, there are several worrying signs that indicate otherwise.
One of the main concerns is the lack of bullish momentum in the market. Demand from large BTC holders is weak, with growth rates at a mere 4.8% per month. This is a far cry from the 6%-10% growth rates seen earlier this year when BTC reached its all-time high. Additionally, traders’ demand for BTC has not picked up, as evidenced by on-chain data showing a decrease in holdings since the price peak in May.
Stablecoin liquidity, which is typically correlated with price rallies, has also been declining. Tether’s market capitalization growth has slowed significantly, indicating a lack of buying power in the market. Without sufficient stablecoin liquidity, it is unlikely that prices will see a significant surge.
Another worrying sign is the lack of demand from U.S. investors for bitcoin and ether. The Coinbase Premiums for BTC and ETH have remained below zero since May 20, indicating weak demand from this crucial market segment. Additionally, Bitcoin exchange-traded funds in the U.S. have been experiencing outflows, further highlighting the lack of investor interest.
CryptoQuant’s Bull-Bear Market Cycle indicator is also trending downwards, suggesting that while we may still be in a bull market, there is limited upward momentum. The indicator is currently at its lowest level since October 2023 and is below its 30-day moving average. A crossover with the moving average is needed to signal a more bullish trend.
Given these indicators, it is possible that BTC could see further declines, potentially dropping to $60,000 in the near future.
In conclusion, while CryptoQuant remains optimistic about the market’s long-term prospects, the current lack of bullish momentum and worrying signs of weak demand raise concerns about the immediate future of the cryptocurrency market. Investors should proceed with caution and closely monitor market developments to make informed decisions about their investments.