Bitcoin’s price has seen a significant rally recently, indicating that the crypto asset may have hit its lowest point. The price of Bitcoin reached a high of $67,000, although it was around $64,000 at the time of writing. This increase comes after holders experienced their biggest losses of 2024.
According to analysts at CryptoQuant, on-chain metrics show positive momentum in the short term, but it may not be sustainable due to stablecoin liquidity and stagnant Bitcoin demand. BTC holders incurred losses of $2.5 billion over two days last week, just before the cryptocurrency rebounded. This could signal seller capitulation, often a sign of price bottoms.
Another indication that Bitcoin may have hit its lowest point is the decrease in selling pressure from large entities such as the German government and the rehabilitation estate of Mt. Gox. The German government has no more BTC to sell, and Mt. Gox has transferred its holdings to exchanges to begin distributing them to creditors.
Additionally, Bitcoin traders’ unrealized profit margins have dropped to extremely low levels, the most negative since the collapse of FTX in November 2022. This could suggest that prices have bottomed out. The price of Bitcoin also seems to have hit a low from a valuation perspective, with indicators pointing towards positive momentum.
However, CryptoQuant’s Bull-Bear Market Cycle indicator shows that the market is still in a bull phase, but Bitcoin demand has not yet started to increase, hindering a new price rally to new highs. Faster demand growth is necessary for a significant price increase, but Bitcoin’s demand is still below zero. Similarly, stablecoin liquidity, particularly USDT, has not accelerated, with monthly growth remaining near 0%.
CryptoQuant’s analysis is in line with Bitfinex’s, which has suggested that Bitcoin could face more challenges in the near future. While the market may be in a bull phase, certain factors need to align for a sustained price increase.
In conclusion, while there are positive signs that Bitcoin may have bottomed out, there are still challenges ahead for the cryptocurrency to see significant growth. Investors should keep a close eye on demand and stablecoin liquidity to gauge the market’s future direction.