Market analysts using CryptoQuant’s platform have highlighted several on-chain metrics that could potentially indicate a reversal in the current downtrend of the bitcoin price and the beginning of a new rally in the cryptocurrency market.
One of the key signals mentioned in the latest weekly report is the presence of higher bullish momentum. This indicates that there is a shift towards positive sentiment in the market, which is crucial for prices to start recovering.
Another important metric to watch is the acceleration of Bitcoin demand growth. In order for prices to make a comeback, demand levels need to pick up to levels seen earlier in the year. While there has been some recovery in demand post-May, it is still below the levels witnessed during the launch of U.S. spot Bitcoin ETFs.
A significant factor in determining whether Bitcoin has hit bottom is the buying behavior of long-term holders. Currently, these investors are purchasing BTC at a slower pace compared to earlier this year. In order for prices to gain momentum, there needs to be a substantial increase in their buying activity.
Based on Metcalfe price valuation bands, the ultimate price support level for Bitcoin is estimated to be at $56,000. Any drop below this level could lead to a major correction in the market, wiping out additional value. Thus, monitoring price movements around this level is crucial in determining the direction of the market.
Traders’ on-chain unrealized profit margins turning positive could be an indication of upcoming rallies. Additionally, an increase in Bitcoin flow from other exchanges to platforms like Coinbase could signal a rise in U.S. investor demand, typically correlating with higher prices.
Lastly, an acceleration in stablecoin liquidity, particularly the growth in Tether’s market cap over a 60-day period, points towards an influx of capital into the market. This liquidity inflow is essential for prices to experience an upward movement.
These on-chain metrics provide valuable insights into the current state of the cryptocurrency market and potential price movements in the near future. Keeping a close eye on these indicators can help investors and traders make informed decisions in the volatile world of cryptocurrencies.
