Bitcoin ($BTC) is trading at $61,336.93 at the time of writing, approaching the $60,000 level.
Having said that, $BTC It has fallen more than 24% in the last month, from $82,000 in mid-May to $61,000 at the time of publication.
The crypto community is divided
Given this significant decline, there appears to be some disagreement within the cryptocurrency community. For example, one analyst highlighted that the RSI of Bitcoin market capitalization is below its 2018 low.
he said:
However, another analyst saw exactly the opposite trend, pointing out that:
Interestingly, algorithmic trading firm Wintermute claimed there was no clear sign that capital was coming back. They also flagged that the bottom of the market has not yet been confirmed.
According to Wintermute, the main reasons for Bitcoin’s recent decline are institutional selling and ETF withdrawals in the US.
What direction will Bitcoin trend in the future?
Therefore, to determine where Bitcoin is actually leaning, CryptoQuant’s Losing Bitcoin Supply, 7-day Moving Average is the perfect on-chain indicator.
According to our analysis, this indicator is more than 50%. This means that more than half of the supply of coins in circulation is based on the last price these coins moved at. $BTC Currently in deficit.
Such levels have historically coincided with periods of extreme market pessimism and capitulation.
In such a scenario, investors are more likely to sell due to fear of long-term price declines. The last time this indicator crossed the 50% mark was in November 2022, when Bitcoin was trading below $20,000 after the FTX collapse.
Furthermore, the profit and loss graph by Glassnode shows that almost half of the total supply was profitable at the peak of the cycle.
More than 8 million Bitcoins are currently underwater, and that number is rapidly declining, highlighting the magnitude of the recent market reset.
Is Bitcoin nearing stability, or is volatility becoming more severe?
Additionally, AMBCrypto also stated that the bulls failed to push the price further higher. However, the SwissBlock Risk Index and Bitcoin ETF flow data indicate that market conditions are shifting towards a riskier environment, which is necessary to determine whether Bitcoin is truly stable.
As the risk index rises to 100, the highest level on the chart, Bitcoin falls to around $61,000, indicating strong selling pressure. Meanwhile, there have been significant net outflows from US spot Bitcoin ETFs, suggesting that institutional investors are reducing their exposure rather than increasing it.
all in Swissblock says:
Selling pressure is being absorbed again. The key here is to look for the first accumulation signal. As long as the risk is at the risk of capitulation, Bitcoin will continue to be under structural pressure.
Final summary
- While some market analysts believe the downtrend is still ongoing, others point to historically oversold RSI levels as a potential bottom signal.
- Growing signs of capitulation are evident in on-chain data, as CryptoQuant’s Bitcoin Supply Loss Index exceeds 50% for the first time since the FTX-led bottom in November 2022.
