The Bitcoin price experienced a 2.25% drop in the last 24 hours, currently trading 16% below its all-time high of $73,835, which was reached on March 14. Over the past 30 days, Bitcoin has seen an 8.75% decline and a 5.5% drop in the last three months. This continuous downward trend since June has prompted market analysts to speculate whether the peak cycle for Bitcoin has been reached.
Is Bitcoin Showing Signs of Weakness?
Charles Edwards, founder of Capriole Investments, highlighted that various data points suggest Bitcoin’s inability to reach new highs after two attempts, indicating potential fragility. In his recent newsletter, Edwards mentioned that the inflation rate of long-term Bitcoin holders (LTH) has been on the rise for the past two years, pointing to increased selling pressure.
Why Is Market Inflation Important?
According to Glassnode, the LTH market inflation rate tracks the annual rates of accumulation or distribution beyond daily miner issuance. Elevated values signify higher selling pressure as long-term holdings diminish. Historically, peaks in market inflation surpass nominal inflation during bull market peaks, suggesting a potential end to the cycle.
Key Takeaways from Dormancy Flow Data
Another critical metric for understanding Bitcoin market cycles is the Dormancy Flow data, which evaluates the number of tokens spent relative to general trends. Glassnode data indicates a sharp rise in the Bitcoin Dormancy Z-score over the last 90 days. Edwards noted that this metric peaked significantly in April, indicating that the average age of spent assets was notably higher in 2024.
– Higher LTH inflation rates are linked to increased selling pressure.
– Dormancy Flow data spikes usually predict cycle peaks within three months.
– Current Dormancy Flow Z-score suggests Bitcoin may be overvalued relative to transactional assets, hinting at a bearish trend.
In conclusion, these indicators collectively suggest that Bitcoin’s price may have already peaked, signaling potential bearish trends for the broader cryptocurrency market. This analysis, supported by various data points, offers a comprehensive view of Bitcoin’s current market position.