BTC Will Buy Bitcoin Price Will Face Major ‘Summer 2021’ Style Correction

Several onchain metrics signal that Bitcoin is at a “tipping point.”

Bitcoin (BTC) has been in a downtrend since coming back from a new all-time high in March. Bitcoin's price action over the past month has been characterized by a series of low highs and low lows, reaching a two-month low of $53,500 on July 5.

Despite the return of more than $57,000, continued Bitcoin selling by the German government and Gox payments threaten further losses for BTC.

The CryptoQuant report shows that the Profit and Loss (P&L) index is hovering around the 365-day moving average (MA). The onchain data provider explains that if this index falls below the 365-day mark, Bitcoin may begin a major correction as seen in previous quotes.

“Crossing down is associated with major corrections (May-July 2021) or the beginning of a bear market (November-December 2021). See red circles.”

CryptoQuant's Bitcoin Bull-Bear Market Cycle Indicator is approaching a critical level and “may turn into a market if the price declines further.”

The chart below shows the indicator playing the same way it did in March 2020, May 2021 and November 2021. A fall below the neutral line indicates that the market has turned into a bear phase, indicating further declines.

According to CryptoQuant, these two metrics indicate that Bitcoin is “at a point where a local bottom could form or a major ‘Summer-of-2021' pattern correction is possible.”

In addition, Tether (USDT) market price growth has stalled, suggesting that a rally may be difficult to come by as historical recoveries may result in increased liquidity of the stablecoin, CryptoQuant added. The growth of the USDT market is often considered the main driver of the bull market.

“USDT market capitalization is still declining. Bitcoin price typically rises when more liquidity enters the crypto market with USDT rallying, this situation is still not met.”

Related: Price Analysis 7/10: BTC, ETH, BNB, SOL, XRP, DOGE, TON, ADA, AVAX, SHIB

Meanwhile, Bitcoin Wells is piling up sharply as the recent pullback has given large holders a chance to buy more on the dip, with the stack increasing by 6.3% in the past month, the fastest pace since April 2023.

CryptoQuant said that this indicates “increased demand for Bitcoin” at low levels. This is confirmed by the inflows into US-based Bitcoin Exchange Traded Funds (ETFs).

According to data from Soso Value, despite the BTC price hitting a four-month low on July 5, institutional investors poured $143.1 million into spot Bitcoin ETFs that day. This was followed by a net income of $294.9 million and $216.4 million on July 8 and July 9, respectively.

This institutional support reverses the selling pressure while at the same time demonstrating BTC's acceptance in the financial mainstream.

From a technical perspective, according to Benjamin Cowen, founder of “Into The Cryptoverse” newsletter, Bitcoin's short-term resistance lies at $59,000 at the 200-day simple moving average.

In the year Since the breakout on July 4, the price has been locked below this level and bulls were expected to push it back to support to avoid further losses.

“This is the 200D SMA and BTC matches the broken trendline.”

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.