Title: Is it too late to buy? Bitcoin May Hit Bottom According to Data
While US stocks excel, Bitcoin continues its downward trend, dropping below $60,000 again this morning (4th), reaching a low of $57,800. Simultaneously, Bitcoin’s volatility and trading volume remain low, with scarce major speculative themes in the market aside from sporadic projects, causing the cryptocurrency fear and greed index to revert back to fear.
Nevertheless, external media outlet “CoinDesk” reports recent data indicating Bitcoin’s price may have bottomed out.
Data One: Coinbase Bitcoin Premium Index
The Coinbase Bitcoin Premium Index compares Bitcoin prices on Coinbase with other exchanges. When Coinbase’s price exceeds other major exchanges, it typically indicates higher demand from US investors for Bitcoin.
Recently, FalconX research director David Lawant noted a significant negative trend in the Coinbase Premium Index, last observed just before the surge from October to March this year. CryptoQuant data shows the Coinbase Premium Index remained negative throughout much of May and June, similar to the stagnant market period of August to September last year. In November 2022, the index hit rock bottom with Bitcoin prices around $16,000, marking the bear market’s nadir.
Lawant believes the Coinbase Premium Index has become a reliable leading indicator for trends, highlighting significant US investor influence in the Bitcoin market. Considering potential catalysts like ETFs, US monetary policy, and the presidential election, all linked to the US, he expects this trend to persist.
Data Two: Bitcoin Hashrate Decline
Bitcoin hashrate (or hash rate) refers to the computing power used by miners to mine Bitcoin. According to CryptoQuant data, since the fourth Bitcoin halving, hashrate has plummeted to levels close to those seen during FTX’s bankruptcy. A decline in Bitcoin hashrate typically signifies increased selling pressure from miners, potentially indicating Bitcoin hitting bottom.
When Bitcoin’s hashrate drops, it suggests miners are unable to profitably mine, prompting them to cease mining operations and sell their Bitcoin holdings. Historical trends show that while miner sell-offs may cause short-term declines, hashrate drops to certain lows often precede a rebound.
CryptoQuant’s daily miner income data also indicates a steep decline, plummeting from $79 million on March 6 to $29 million. Performance metrics such as hashrate, hash price, and daily miner income suggest current miner capitulation mirrors December 2022, widely considered the bear market bottom.
However, some analysts hold divergent views. “Crypto City” previously reported that Capriole Investments founder and analyst Charles Edwards cited multiple indicators suggesting Bitcoin might actually be at a cyclical peak now. Analysts from 10x Research also remain cautious about recent trends, outlining ten reasons why Bitcoin could fall back to $55,000.
This article is a collaborative reprint from:
Crypto City