Analysts at market research platform CryptoQuant have outlined on-chain metrics that could be a sign that the Bitcoin (BTC) price has bottomed out and cryptocurrencies are starting to rise again.
The latest weekly CryptoQuant report cited signals such as stronger bullish momentum, increasing BTC demand, and faster growth in stablecoin liquidity as metrics to watch.
Higher bullish momentum
CryptoQuant’s Bitcoin Bull-Bear Market Cycle indicator is currently signaling that the crypto market is in its least bullish state since March 2023, when the U.S. banking crisis broke out.
With BTC price hovering around $61,000 at the time of writing and having fallen to a monthly low of $58,500 earlier this week, the market needs bullish momentum for prices to recover. This means CryptoQuant’s Bull-Bear Market Cycle indicator needs to rise above its 30-day simple moving average.
Additionally, Bitcoin demand growth needs to accelerate to first-quarter levels for prices to recover. Although demand growth recovered somewhat after May, it is still significantly slower than it was earlier this year when the U.S. spot Bitcoin ETFs were launched.
Increased buying by persistent Bitcoin holders may be a sign that the price of the leading digital asset has bottomed out. Currently, this group of investors is buying BTC at a monthly rate of 72,000 BTC, a far cry from the monthly rate of 160,000 BTC in Q1. While the rate has recovered slightly from the rate of 68,000 BTC in May, much higher buying is needed for prices to regain momentum.
A possible major correction
Bitcoin’s ultimate price support level is at $56,000 based on the Metcalfe price scoring bands that marked resistance and top levels in the previous cycle. Any drop below this support level could trigger a larger correction that would wipe out even more value from the market. Therefore, this level could determine whether Bitcoin has bottomed out or not.
In addition, positive unrealized profit margins from on-chain traders could be a sign of upcoming price rallies. An increase in Bitcoin flow from other exchanges to Coinbase signals an increase in Bitcoin demand from U.S. investors, which often correlates with higher prices.
Finally, an acceleration in stablecoin liquidity, often seen in the 60-day growth in Tether’s (USDT) market cap, indicates an inflow of capital into the market – a crucial indicator needed for prices to move higher.
