blockchainreporter.net
Bitcoin’s price has dropped to a one-month low, reaching $58.5K this week, as confirmed by CryptoQuant, a leading analytic firm. This decline aligns with predictions from their previous report, which highlighted slow demand growth for Bitcoin. Despite the cryptocurrency market remaining in a bull phase, it exhibits the least bullish sentiment observed since March 2023.
The ultimate support level for #Bitcoin is $56K; falling below this could lead to a major correction. pic.twitter.com/ZD9xDN6wAm
— CryptoQuant.com (@cryptoquant_com) June 28, 2024
CryptoQuant’s latest report details several crucial on-chain metrics to determine whether Bitcoin has reached its price floor and the conditions necessary for a potential recovery. The report emphasises the importance of a resurgence in bullish momentum for prices to recover.
Demand Dynamics
According to CryptoQuant, Bitcoin demand has slightly increased since late May. However, the growth remains tepid, underlining the need for accelerated demand to drive a significant price rally. The report suggests that for Bitcoin prices to experience a robust rally, there needs to be a substantial increase in demand, particularly from U.S. investors. Notably, U.S. investor demand for Bitcoin has recently dipped into negative territory, as indicated by CryptoQuant’s Inter-exchange Flow Pulse indicator. This tool correlates U.S. investor demand growth with higher Bitcoin prices.
The liquidity from stablecoins, crucial for injecting funds into the market, is also growing slower. Increased liquidity growth from stablecoins is necessary for a sustainable rally in Bitcoin prices. Furthermore, the report identifies $56K as the ultimate support level for Bitcoin, based on Metcalfe’s price valuation bands (red line). This metric previously acted as resistance during the last cycle but served as a strong support level in May. Falling below this threshold could signal a significant market correction.