Bitcoin (BTC) has experienced a decline of 2.25% in the past 24 hours, currently standing 16% below its record peak of $73,835 set on March 14. Over the last 30 days, its value has dropped by 8.75%, and over the last three months, it’s down by 5.5%. The trend in June showed a downward trajectory, prompting speculation among market analysts about whether Bitcoin has reached its “cycle top.”
Several factors are contributing to the view that Bitcoin’s bull market may have peaked. Charles Edwards, founder of Capriole Investments, pointed to various on-chain metrics suggesting weakness. Specifically, he highlighted the Bitcoin long-term holder (LTH) inflation rate nearing a critical threshold. According to Edwards, this rate, which measures the annualized accumulation or distribution rates among long-term holders compared to daily issuance to miners, has steadily risen over the past two years. Elevated values indicate increased sell-side pressure as long-term holders reduce their Bitcoin holdings. Edwards noted that historically, peaks in market inflation above nominal inflation, particularly beyond the 2.0 threshold, often coincide with cycle tops.
Another metric under scrutiny is Bitcoin Dormancy Flow, used to assess market cycles and Bitcoin’s bullish or bearish sentiment. Recent data from Glassnode shows a significant increase in Bitcoin Dormancy Z-score over the past 90 days. Edwards highlighted that peaks in this metric typically precede cycle tops by about three months, indicating that the current increase may suggest a nearing peak.
Additionally, spikes in Spent Volume, particularly among addresses holding Bitcoin for 7-10 years, have historically signaled increased risk. Edwards pointed out significant growth in this metric in 2024, suggesting potential concerns about Bitcoin’s cycle top.
Edwards also commented on recent developments involving Mt. Gox, the defunct crypto exchange preparing to repay creditors with over $9 billion worth of Bitcoin. Swan, a Bitcoin financial services firm, noted the market’s apprehension about this upcoming release, emphasizing potential selling pressures despite expectations of gradual distribution due to long-term holder strategies and institutional considerations.
Governments’ continued sale of Bitcoin also contributes to the supply-side pressure, affecting market dynamics. Recent reports indicate significant transactions by a German government entity, which further adds to market volatility and investor caution.
Investors are advised that this article does not provide investment advice. Each investment decision involves risks, and readers are encouraged to conduct their own research before making any financial decisions.