Bitcoin (BTC) price has dropped 3.5% over the past 24 hours and is currently 17.43% lower than its all-time high of $73,835, reached on March 14.
BTC/USDT Daily Chart | Source: TradingView
Bitcoin price has fallen 11.2% in the past 30 days and 6.5% in the past three months. BTC price has been trending lower in June and has led many market analysts to wonder whether it has reached a “cycle peak”?
Let’s take a look at some of the reasons why many analysts believe the Bitcoin bull market has peaked.
Long-Term Bitcoin Holders’ Inflation Rate Is Approaching a Key Threshold
Capriole Investments founder Charles Edwards said that multiple on-chain indicators show that Bitcoin’s failure to make a new high after two retests is a “sign of weakness.”
In his latest newsletter, Edwards explain that the inflation rate of long-term Bitcoin (LTH) investors has been steadily increasing over the past two years.
According to Glassnode, the LTH inflation rate measures the annual accumulation or distribution rate compared to the daily issuance to miners. A higher value indicates that LTH is adding selling pressure as their Bitcoin holdings decrease.
At bull market peaks, market inflation surpasses nominal inflation – the 2.0 threshold – “which typically marks a cyclical top,” Edwards said.
“With 1.9 today, we are very close to the top, in my opinion.”
Bitcoin LTH Inflation Rate | Source: Gassnode
Bitcoin Dormancy Flow Has Increased in 3 Months
Another useful metric for identifying market cycles and assessing whether Bitcoin is rising or falling is Dormancy Flow. This is an on-chain metric that measures the amount of coins being spent relative to the overall trend.
Additional data from Glassnode reveals that the Bitcoin Dormancy Z-score has increased sharply over the past 90 days.
Edwards observed that the metric peaked in April, suggesting that the average age of spent coins is significantly higher in 2024. “Peaks in this metric (Z-score) typically signal cyclical peaks just three months later,” the analyst explained.
“Well, it’s now three months later. The price has only gone down and the Dormancy Z-Score peak remains with a very similar structure to the 2017 and 2021 peaks.”
Bitcoin Dormancy Z-score | Source: Glassnode
At its current value, the Dormancy Flow Z-score signals that Bitcoin is overvalued relative to the total number of coins in a transaction that is not supported by trading volume. This suggests that Bitcoin’s price may have reached a cyclical peak, which could also be bearish for the cryptocurrency market in general.
Spike in Spent Volume Could Be a Bitcoin Top Signal
Finally, growth clusters and increases in Spent Volume help indicate what Edwards calls “areas of rising risk.” History shows that when Bitcoin’s spend volume over 7-10 years spikes, this can signal a cycle top.
It is also worth noting that the increased spending volume in 2024 suggests that this cycle is progressing rapidly.
“This chart will surprise you,” Edwards speak in a post on X on July 2.
“The entire history of this chart is gone because a huge amount of Bitcoin was moved on-chain, 10x more than previous highs.”
Bitcoin Spending Volume Lasts 7-10 Years | Source: Glassnode
Edwards also noted that more than $9 billion worth of Bitcoin has been moved by addresses that are more than ten years old. He attributed this distribution to the recent move by the bankrupt cryptocurrency exchange Mt. Gox, as it prepared to repay creditors in late July.
Swan, a Bitcoin financial services company, shared a similar view, saying the market is concerned about the impact of the 142,000 Bitcoins (~$9 billion at current prices) that Mt. Gox creditors will soon receive after ten years.
“While many creditors may sell immediately upon receipt, the many options and tax implications suggest that the pressure to sell is gradual rather than sudden,” Swan explains.
In a subsequent post on X, the company added that continued selling by governments is adding pressure to the Bitcoin supply on the market.
Source: Swan
A recent report by Bitcoin Magazine revealed that a cryptocurrency wallet labeled “German Government (BKA)” moved 832.7 Bitcoin (~$52 million) in four separate transactions on July 2. According to data from Arkham Intelligence, the wallet sent 100 BTC to Coinbase, 150 BTC to Bitstamp, and 32.74 BTC to Kraken.
Tracking the selling patterns of Bitcoin “whales” can provide investors with valuable clues about Bitcoin prices as large sell orders can signal a market top.
You can see coin prices here.
Disclaimer: This article is for informational purposes only and is not investment advice. Investors should do their own research before making any investment decisions. We are not responsible for your investment decisions.
SN_Nour
According to Cointelegraph
