Bitcoin
Has Bitcoin Crashed? Here’s How You’ll Know
Analysts at market intelligence platform CryptoQuant have outlined on-chain metrics that could indicate that the price of bitcoin (BTC) has bottomed out and cryptocurrencies are starting to recover again.
CryptoQuant’s latest weekly report mentioned signs such as increased bullish momentum, increased demand for BTC, and faster stablecoin liquidity growth as metrics to watch.
Highest Bullish Momentum
CryptoQuant’s Bitcoin Bull-Bear Market Cycle Indicator Currently signals that the cryptocurrency market is at its least optimistic state since March 2023, when the United States banking crisis occurred.
With BTC hovering around $61,000 at the time of writing and having fallen to a one-month low of $58,500 earlier this week, the market needs some bullish momentum for prices to recover. This means that CryptoQuant’s Bull-Bear Market Cycle indicator needs to rise above its 30-day simple moving average.
Furthermore, demand growth for Bitcoin needs to accelerate to levels seen in the first quarter of the year for prices to recover. While demand growth has recovered somewhat since May, it is still significantly slow compared to the rate seen earlier in the year, when U.S. spot Bitcoin exchange-traded funds (ETFs) were released.
The surge in purchases from long-term Bitcoin holders could signal that the price of the leading digital asset has bottomed out. This group of investors is currently buying BTC at a monthly pace of 72,000 BTC, a far cry from the Q1 monthly pace of 160,000 BTC. While the pace has recovered slightly from May’s rate of 68,000 BTC, much higher purchases are needed for prices to regain upward momentum.
A possible important correction
Bitcoin’s final price support level is $56,000, based on Metcalfe’s price assessment ranges, which marked resistance and upper levels in the previous cycle. Any drop below this support level could trigger a major correction that would wipe out even more value from the market. Hence, this level can determine whether Bitcoin has bottomed out or not.
Additionally, traders’ on-chain unrealized profit margins turning positive could signal entry rallies. An increase in the flow of Bitcoin from other exchanges to Coinbase signals an increase in demand for Bitcoin from US investors, which is generally correlated with higher prices.
Finally, an acceleration in stablecoin liquidity, often seen in the 60-day growth of Tether’s (USDT) market cap, indicates an influx of capital into the market – a crucial metric needed for prices to move north.