Markets
Bitcoin bull market is losing momentum, analysts warn
According to blockchain analysts, the euphoric momentum of the Bitcoin bull market is waning across all metrics.
Reflexivity Research co-founder Will Clemente noted on Tuesday that Bitcoin’s price, down 3% to $64,500 at the time of writing, is now near the “short-term holder cost base” of $63,800, according to Glassnode data. This is an on-chain indicator that tracks the average price at which recent investors have purchased.
“I don’t want to see consecutive days closed in a row,” Clemente wrote. “It generally serves as a good line in the sand for trends.”
Meanwhile, on-chain analytics firm CryptoQuant said in a report on Tuesday that the on-chain realized price for short-term holders is actually higher at $65,800, meaning Bitcoin has already lost that level of support.
In theory, short-term bond holders are more likely than long-term investors to panic when their investments go slightly underwater. This makes the group’s realized price a key support line which, if missed, can trigger major losses very quickly.
For example, the last time Bitcoin lost this support line was in early May, when the price immediately dropped 8% below $57,000. At today’s prices, an 8% correction would take Bitcoin to $60,000.
As the price consolidates lower, various other metrics point to declining demand from new investors in recent weeks.
Not just the miners they keep throwing away their coins, but the market capitalization of stablecoin giant Tether (USDT), the dollar-pegged token that investors often use to trade in and out of BTC, is now growing at the slowest pace since November. Meanwhile, Bitcoin whales are also accumulating coins at a relatively slower pace intensify your purchases at the end of May.
According to CryptoQuant’s Bull/Bear Market Indicator, Bitcoin remains in a “bull market,” but with low bullish momentum.
“The overall realized price is $30.4K,” CryptoQuant head of research Julio Moreno wrote in a message to Decrypt. This metric tracks the cost base for all Bitcoin holders, including long-term HODLers. The further the market price of Bitcoin moves away from this level, the more the asset is entrenched in a bull market, or so the theory goes.
“Comparing the realized price with the market price we see that the market price is approximately 2.18 times the realized price (MVRV ratio), which signals that we are halfway there [through] a bull market,” the analyst added. “Usually the price caps come in at 4.0 or higher.”
By Ryan Ozawa.