Bitcoin’s (BTC) price has dropped by 2.25% in the past 24 hours and is currently 16% below its record peak of $73,835, achieved on March 14.
The BTC/USD daily chart data is sourced from TradingView.
Over the last 30 days, Bitcoin’s price has fallen by 8.75%, and it’s down by 5.5% over the past three months. June saw a downtrend for BTC, prompting market analysts to ponder whether the cryptocurrency’s “cycle top” has been reached.
Analysts are suggesting several reasons for believing that Bitcoin’s bull market has reached its zenith. Charles Edwards, founder of Capriole Investments, highlighted that multiple onchain metrics indicate weakness due to Bitcoin’s inability to achieve new highs after two retests.
In his recent newsletter, Edwards explained that the Bitcoin Long-term Holder (LTH) inflation rate has steadily risen over the past two years. According to Glassnode, the LTH market inflation rate measures the annual accumulation or distribution rates in excess of daily issuance to miners. Higher values indicate that LTHs are increasing sell-side pressure as they diminish their Bitcoin holdings. Edwards noted that at market tops, inflation peaks above nominal inflation – the 2.0 threshold – typically signaling a high likelihood of the cycle topping out.
Source: Glassnode
Another crucial metric for assessing market cycles is Dormancy Flow, which tracks the movement of coins relative to the overall trend. Recent data from Glassnode reveals a significant increase in Bitcoin Dormancy Z-score over the past 90 days.
Edwards observed a peak in this metric back in April, suggesting that the average age of spent coins has risen significantly. Historically, peaks in this metric precede cycle tops by approximately three months.
Source: Glassnode
The current value of the Dormancy Flow Z-score indicates that Bitcoin may be overvalued relative to transactional volume, potentially signaling a cycle top and bearish conditions for the broader crypto market.
Edwards also pointed out spikes in Spent Volume as potential “areas of growing risk.” Historically, sudden increases in Bitcoin’s 7-10-year Spent volume have signaled market tops. The notable growth in spent volume in 2024 underscores the rapid progression of this cycle.
Source: Glassnode
Edwards highlighted that over $9 billion worth of Bitcoin has been moved by addresses older than ten years, attributed to the forthcoming payout by the defunct crypto exchange Mt. Gox to its creditors in July. Swan, a Bitcoin financial services firm, echoed concerns about the impact of the approximately 142,000 Bitcoin (~$9 billion) set to be released.
Swan noted that while many creditors are long-term holders with payout options, institutional ownership and tax considerations suggest gradual rather than sudden selling pressure, even if all coins hit the market simultaneously.
Additionally, governments’ continued selling contributes to the supply-side pressure on Bitcoin, as noted in a follow-up post by Swan. A recent report by Cointelegraph highlighted significant transactions involving a German Government (BKA) labeled cryptocurrency wallet, which transferred 832.7 Bitcoin (~$52 million) across four transactions on July 2, according to Arkham Intelligence data.
Understanding the selling patterns of Bitcoin whales can provide investors with valuable insights into price movements, given that large sell orders can indicate a market top. It’s important to note that this article does not offer investment advice or recommendations. Every investment decision involves risk, and readers should conduct their own research before making any decisions.