Over the past weekend, the price of bitcoin has seen a significant rally, indicating a possible bottoming out of the crypto asset. The price of BTC reached a high of $67,000, although it currently hovers around $64,000. Analysts at CryptoQuant have pointed out that on-chain metrics show positive momentum in the short term, but sustainability may be questioned due to stagnant stablecoin liquidity and tepid Bitcoin demand.
BTC holders recently experienced losses totaling $2.5 billion over two days last week, just before the cryptocurrency staged a recovery. This could point towards seller capitulation, a common signal of price bottoms in the market. Additionally, the decline in selling pressure from major entities like the German government and the Mt. Gox rehabilitation estate also suggests that Bitcoin may have reached a bottom.
Bitcoin traders’ unrealized profit margins have dropped to extremely low levels, indicating that prices may have bottomed out. Furthermore, from a valuation perspective, indicators suggest positive momentum. The CryptoQuant P&L Index bouncing off its 365-day moving average signals a potential local bottom and hints at possible future price increases.
CryptoQuant’s Bull-Bear Market Cycle indicator hints at the market still being in a bull phase; however, Bitcoin demand has not yet shown signs of growth. For a significant price rally to occur, there needs to be positive and faster demand growth, which is currently lacking. Similarly, stablecoin liquidity, especially from Tether’s USDT, is not experiencing substantial growth, which is essential for continuous price appreciation.
While there are indications that Bitcoin may have bottomed out, there are still factors that could hinder a sustained price rally. It is crucial for demand to pick up and stablecoin liquidity to accelerate for Bitcoin to reach new highs. Both traders and analysts will be closely watching these metrics to determine the future trajectory of the market.
