Crypto Market Faces Worrisome Signs: CryptoQuant
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The crypto market is currently grappling with a lack of bullish momentum, underscored by sluggish growth in bitcoin whale demand and dwindling stablecoin liquidity.
Bitcoin (BTC) and other cryptocurrencies are facing substantial losses, with BTC hovering below critical thresholds and dropping beneath traders’ on-chain realized price of $65,800.Despite these challenges, analysts from CryptoQuant maintain in their recent report that the market is experiencing a bullish season.
Absence of Positive Momentum
The absence of bullish momentum in the crypto market is conspicuous due to feeble growth in bitcoin whale demand and a decline in stablecoin liquidity. Large holders of BTC are showing minimal enthusiasm, with demand growing at a sluggish monthly rate of 4.8%.
Although this represents an improvement from the 2.4% recorded in late May, it falls far short of the robust 6%-10% growth witnessed earlier this year during BTC’s surge to its peak.
Additionally, there has been no resurgence in traders’ appetite for BTC, as indicated by on-chain data suggesting a lack of current buying activity. This group of investors has been reducing their holdings since BTC peaked at $70,000 in late May.
Decreasing Stablecoin Liquidity
Stablecoin liquidity, which traditionally correlates with price surges, continues to decline, marking its slowest pace since November 2023.
Tether (USDT), for instance, has seen its 60-day market capitalization growth decelerate sharply from $12.6 billion in late April to $3.7 billion currently. A higher level of stablecoin liquidity is crucial for stimulating price increases in the crypto market.
Potential BTC Decline to $60,000
Moreover, demand from U.S. investors for bitcoin and ether (ETH) remains notably subdued, as evidenced by the sustained negativity in BTC and Ethereum Coinbase Premiums since May 20. The growth in demand from U.S. investors is pivotal in determining the trajectories of BTC and ETH prices.
The waning interest from U.S. investors is further evidenced by the consistent outflows observed in spot Bitcoin exchange-traded funds since June 13, collectively losing over $100 million on each trading day over the past week.
Meanwhile, BTC faces the prospect of further decline towards $60,000, having fallen below traders’ on-chain realized price. This persistent lack of bullish momentum and tepid demand from significant investor segments pose ongoing challenges for the crypto market moving forward.
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