Is Bitcoin’s Bull Market Ending? Analysts Warn of Slowing Momentum

Bitcoin’s recent bull market appears to be losing momentum, with several key metrics indicating a potential shift in investor sentiment. Blockchain analysts are closely monitoring these changes to predict the market’s future direction. Here’s a detailed analysis of the current situation.

Declining Demand from New Investors

The euphoric momentum that has driven Bitcoin’s price surge is showing signs of weakening. According to blockchain analyst Will Clemente, Bitcoin’s price, which dropped 3% to $64,500, is nearing the “short-term holder cost basis” of $63,800. This on-chain indicator, provided by Glassnode, tracks the average price at which recent investors bought Bitcoin.

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“Don’t want to see consecutive days closed below,” wrote Clemente, highlighting the importance of this price level as a support line for maintaining the bullish trend.

However, CryptoQuant, another on-chain analytics firm, reported that the realized price for short-term holders is actually higher at $65,800. This indicates that Bitcoin has already lost a crucial level of support, which could trigger panic selling among short-term investors.

The last time Bitcoin fell below this support line was in early May, leading to an 8% drop to under $57,000. If a similar correction occurs now, Bitcoin’s price could fall to around $60,000.

Market Reaction and Key Metrics

Bitcoin’s price has continued to decline, falling below $65,000 to its lowest level in a month. The total market capitalization of the cryptocurrency space dropped from $2.55 trillion to $2.48 trillion, a 2.5% decrease according to CoinGecko. Bitcoin’s price reached $64,548, marking its lowest point in the past month.

In addition to price declines, other metrics indicate waning demand from new investors. The market capitalization of Tether (USDT), a stablecoin often used to trade in and out of Bitcoin, is growing at its slowest rate since November. This slowdown suggests reduced trading activity and demand for Bitcoin.

Moreover, Bitcoin whales, who had been accumulating coins at a high rate in late May, are now doing so more slowly. This decrease in whale activity further supports the idea that the bullish momentum is fading.

Bull Market Indicators

Despite these signs of weakening momentum, some analysts believe Bitcoin is still in a bull market, albeit with reduced intensity. CryptoQuant’s bull/bear market indicator classifies Bitcoin as being in a “bull market,” though with low bullish momentum.

“The overall realized price stands at $30.4K,” noted CryptoQuant head of research Julio Moreno. This metric tracks the cost basis for all Bitcoin holders, including long-term investors. The current market price is approximately 2.18 times the realized price (MVRV ratio), indicating that Bitcoin is halfway through a typical bull market. Historically, price tops occur when the MVRV ratio reaches 4.0 or higher.

As the market continues to evolve, investors and analysts will be watching these key indicators closely. The potential for further declines and the ongoing behavior of both short-term and long-term holders will be crucial in determining the future direction of Bitcoin’s price.

In summary, while Bitcoin’s bull market is showing signs of losing momentum, it remains in a bullish phase. Investors should stay informed and monitor key metrics to navigate the market’s uncertainties.