Bitcoin’s price has reached a one-month low, dropping to $58.5K this week, according to CryptoQuant, a leading analytic firm. This decline aligns with their previous report, which highlighted slow demand growth for Bitcoin. Despite the cryptocurrency market being in a bull phase, it currently exhibits the least bullish sentiment observed since March 2023.
CryptoQuant’s latest report focuses on crucial on-chain metrics to determine if Bitcoin has reached its price floor and the conditions required for a potential recovery. The report emphasizes the importance of a resurgence in bullish momentum for prices to recover.
Regarding demand dynamics, CryptoQuant notes that Bitcoin demand has slightly increased since late May. However, the growth remains tepid, indicating the need for accelerated demand to drive a significant price rally. The report suggests that for Bitcoin prices to experience a robust rally, there needs to be a substantial increase in demand, particularly from U.S. investors. Notably, U.S. investor demand for Bitcoin has recently dipped into negative territory, as indicated by CryptoQuant’s Inter-exchange Flow Pulse indicator. This tool correlates U.S. investor demand growth with higher Bitcoin prices.
The liquidity from stablecoins, which is crucial for injecting funds into the market, is also growing at a slower pace. Increased liquidity growth from stablecoins is necessary for a sustainable rally in Bitcoin prices. Additionally, the report identifies $56K as the ultimate support level for Bitcoin, based on Metcalfe’s price valuation bands (red line). This metric previously acted as resistance during the last cycle but served as a strong support level in May. Falling below this threshold could signal a significant market correction.
Tags: BTC