Bitcoin’s (BTC) price has declined by 2.25% in the past 24 hours and is currently 16% below its record peak of $73,835, which was achieved on March 14th.
On the daily BTC/USD chart, sourced from TradingView, Bitcoin has experienced an 8.75% drop over the last 30 days and a 5.5% decrease over the past three months. June saw a downward trend in Bitcoin’s price, prompting market analysts to speculate whether the cryptocurrency’s “cycle top” has been reached.
Several factors contribute to analysts’ belief that Bitcoin’s bull market has potentially peaked. Charles Edwards, founder of Capriole Investments, highlighted that multiple onchain metrics indicate weakness due to Bitcoin’s failure to surpass previous highs after two retests. In his recent newsletter, Edwards explained that the inflation rate of Bitcoin’s long-term holders (LTH) has been steadily rising over the past two years.
According to Glassnode, the LTH market inflation rate measures the annualized accumulation or distribution rates beyond daily miner issuances. Higher values signify increased sell-side pressure as long-term holders reduce their Bitcoin holdings. Edwards noted that at market tops, inflation often exceeds nominal rates, specifically the 2.0 threshold, which typically signals a high probability of a cycle peak.
Source: Glassnode
Another significant metric is Dormancy Flow, which assesses market cycles by tracking the number of coins spent relative to the overall trend. Recent data from Glassnode shows a sharp increase in Bitcoin’s Dormancy Z-score over the past 90 days. Edwards pointed out that peaks in this metric, such as the notable one in April, often precede cycle tops by approximately three months.
Source: Glassnode
The current Dormancy Flow Z-score suggests that Bitcoin is overvalued relative to transactional activity, implying a potential cycle peak that could bear implications for the broader crypto market.
Furthermore, spikes in Spent Volume also serve as indicators of risk. Edwards highlighted that sudden increases in Bitcoin’s 7-10-year Spent Volume historically signal potential cycle peaks. In 2024, growing spent volumes indicate a rapidly progressing cycle.
Source: Glassnode
Edwards additionally noted a significant movement of over $9 billion worth of Bitcoin from addresses older than ten years, attributed to the impending repayment by the defunct crypto exchange Mt. Gox to its creditors later this month. Swan, a Bitcoin financial services firm, echoed concerns about the potential impact of the release of approximately 142,000 Bitcoin (~$9 billion) into the market, primarily held by Mt. Gox creditors.
According to Swan, gradual selling pressure from these creditors, considering institutional ownership and tax implications, may mitigate immediate market impact despite the large influx of coins.
Moreover, recent reports from Cointelegraph highlighted significant transactions involving a German government-labeled cryptocurrency wallet transferring substantial amounts to various exchanges on July 2nd. Such actions by Bitcoin whales can provide valuable insights into market sentiment and potential tops.
This article does not provide investment advice. Every investment decision involves risks, and readers should conduct their own research before making any decisions.