Has Bitcoin Bottomed? This is how it is known

Analysts at market intelligence platform CryptoQuant have listed on-chain metrics indicating that the price of bitcoin (BTC) has dropped and that cryptocurrencies are beginning to rally.

The latest weekly CryptoQuant report cites high bullishness, increased demand for BTC and rapid stable coin liquidity growth as parameters to watch.

High bullish momentum

CryptoQuant's Bitcoin Bull-Bear Market Cycle Indicator currently shows that the crypto market has been in the least bullish state since March 2023, when the US banking crisis hit.

With BTC hovering around $61,000 at the time of writing and falling to a one-month low of $58,500 earlier this week, the market needs more momentum for prices to recover. This means that CryptoQuant's Bull-Bear Market Cycle Indicator should rise above the 30-day simple moving average.

Also, Bitcoin demand growth should accelerate to the levels seen in the first quarter of the year, for prices to recover. Although interest growth has recovered slightly since May, it is still very slow compared to the pace seen earlier in the year when US bitcoin exchange-traded funds (ETFs) were launched.

An increase in buying from regular Bitcoin holders could signal a drop in the value of the leading digital asset. Currently, this group of investors is buying BTC at a monthly rate of 72,000 BTC, which is a far cry from the Q1 monthly rate of 160,000 BTC. Even if the momentum recovers slightly from May's 68,000 BTC high, prices will need much higher buys to regain upward momentum.

A big correction

Bitcoin's final price support level is $56,000, based on Metcalfe's price assessment bands, which have shown resistance and highs in the previous cycle. Any decline below this support level could trigger a major correction that would wipe out more value from the market. So this level may decide whether Bitcoin goes down or not.

Additionally, traders' unrealized profit margins on the chain becoming positive could indicate upcoming rallies. The increase in Bitcoin flows from other exchanges to Coinbase indicates increased demand for Bitcoin from US investors, which often correlates with higher prices.

Finally, an increase in stable coin liquidity seen in Tether's (USDT) market cap 60-day advance indicates capital inflows into the market – a key metric for prices to move north.