The cryptocurrency market is currently facing a bearish trend, with both bitcoin (BTC) and altcoins experiencing significant losses. BTC is struggling to maintain its position above $65,800, falling below traders’ on-chain realized price. Despite this, CryptoQuant analysts believe that the market is still in a bull season.
The lack of bullish momentum in the crypto market is due to weak demand from bitcoin whales and low stablecoin liquidity. Large BTC holders are showing little interest in increasing their holdings, with demand growing at a slow rate of 4.8% monthly. This is a significant decrease from the 6%-10% growth recorded earlier this year when BTC reached its all-time high. Additionally, traders are not actively purchasing BTC, leading to a decline in their holdings since the price peak in late May.
Stablecoin liquidity, which is usually correlated with price rallies, has also been decreasing. Tether’s 60-day market capitalization growth has fallen from $12.6 billion in late April to $3.7 billion currently. This low liquidity hinders price surges in the crypto market. Moreover, the demand for bitcoin and Ethereum from U.S. investors remains weak, as seen in the negative BTC and Ethereum Coinbase Premiums since May 20. U.S. investor demand plays a crucial role in driving BTC and ETH prices.
Spot Bitcoin exchange-traded funds have also been experiencing outflows since June 13, losing over $100 million every trading day in the past week. CryptoQuant’s Bull-Bear Market Cycle indicator indicates that the market is still in a bull phase but lacks upward momentum. The index is currently at its lowest level since October 2023, below its 30-day moving average. A crossover with its moving average is needed for the index to signal a bullish trend. As a result, BTC may further decline to $60,000 as it has fallen below traders’ on-chain realized price.
In conclusion, the current state of the crypto market is characterized by a lack of bullish momentum, weak demand from bitcoin whales, and low stablecoin liquidity. U.S. investor interest in bitcoin and Ethereum remains subdued, further contributing to the market’s sluggish performance. Despite CryptoQuant’s assertion that the market is still in a bull season, indicators suggest that a significant upward trend is yet to materialize. As BTC continues to struggle to maintain its position above $65,800, further declines to $60,000 could be on the horizon. Investors and traders should closely monitor market indicators and trends to make informed decisions during this challenging period in the cryptocurrency space.
