Bull or Bear Phase? CryptoQuant Says Bitcoin Is at a Pivotal Point

Bitcoin (BTC) is currently at a critical point that could determine whether its price will bottom out or decline further in a correction like that seen in the summer of 2021.

While some metrics suggest that the leading crypto asset has reached the bottom of its latest correction, others signal that there could be more bloodshed and pain for market participants.

Bitcoin at Pivotal Point

CryptoQuant’s latest weekly crypto report says bitcoin’s price may take a little longer to rally or bottom as stablecoin liquidity growth is still not in full swing. Historically, prices rally when more liquidity enters the crypto market through Tether (USDT) minting. However, this condition is yet to be met as the USDT market cap growth is still slowing down.

On the other hand, the market cap of USD Coin (USDC) has been growing by 5.6% monthly. Regardless, Tether’s slow growth indicates that BTC may not be rallying anytime soon.

Analysts at CryptoQuant further revealed that the platform’s Profit and Loss Index signal is hovering over its 365-day moving average; a plunge below this level is often linked to major corrections or the start of a bear market.

In addition, CryptoQuant’s Bull-Bear Market Cycle Indicator could switch to a bear market if prices plunge further. It has been at its lowest bullish level since early 2023, and a reverse to the bear phase could trigger even more decline in the near term.

Investors Are Realizing Losses

Contrarily, large bitcoin investors are now realizing losses. Since BTC plummeted to a four-month low of $53,000 about a week ago, new large investors have realized almost $1 billion in losses. Investors selling their holdings at a loss usually signifies a price bottom.

The margins of bitcoin traders are also negative, and this cohort of investors will only realize losses if they continue to offload their holdings. Traders’ unrealized margins are currently 17%, the most negative since the collapse of the bankrupt crypto exchange FTX in November 2022.

It is also worth mentioning that bitcoin whales and large investors are increasing their holdings at a rate of 6.3% month-on-month, the fastest pace since April 12. This is a sign of growing bitcoin demand, which usually impacts prices positively.

While miners are still capitulating, it remains to be seen which direction BTC will go.