Is it too late to buy now? Data suggests Bitcoin may have reached a low point
While the U.S. stock market is performing well, Bitcoin continues to decline, falling below the $60,000 mark this morning (4th), reaching a low of $57,800. At the same time, Bitcoin’s volatility and trading volume continue to decrease. Apart from sporadic projects, the market also lacks major speculative themes, with cryptocurrency fear and greed indices returning to a state of fear.
Despite this, a report by the external media outlet “CoinDesk” points out that recent data shows that Bitcoin’s price may have bottomed out.
Data one: Coinbase Bitcoin Premium Index
The Coinbase Bitcoin Premium Index refers to the price difference between Bitcoin on the Coinbase exchange and other exchanges. When Coinbase’s price is higher than other major exchanges, it usually indicates higher demand for Bitcoin among U.S. investors.
Recently, FalconX research director David Lawant pointed out that the Coinbase Premium Index is showing a significant negative value. The last time a similar situation occurred was in the months leading up to the surge from October of last year to March of this year.
CryptoQuant data shows that for most of May and June this year, the Coinbase Premium Index has been negative, similar to August and September last year, when the Bitcoin market was also in a boring consolidation period. In November 2022, the index also hit a low point, with the Bitcoin price around $16,000, seen as the bottom of the bear market.
Lawant believes that the Coinbase Premium Index has become a reliable and leading indicator of trends, highlighting the significant influence of U.S. investors in the Bitcoin market. Considering future potential catalysts such as ETFs, U.S. monetary policy, and the presidential election being related to the U.S., he believes this trend will continue.
Data two: Bitcoin hash rate decline
Bitcoin’s hash rate (also known as hash rate) refers to the computational power used by miners to mine Bitcoin. CryptoQuant data shows that since the fourth Bitcoin halving, the hash rate has dropped significantly, nearing the lowest level seen during the FTX bankruptcy. A decrease in Bitcoin’s hash rate usually means an increase in miner selling pressure, which could be one of the signals indicating that Bitcoin has bottomed out.
When Bitcoin’s hash rate drops, it means miners are unable to profit, leading them to stop mining and sell their Bitcoin holdings. Historically, although miner selling can cause short-term declines in Bitcoin’s price, when the hash rate drops to a certain low point, it typically rebounds.
CryptoQuant’s data on miners’ daily income also shows that since March 6th, income has plummeted from $79 million to $29 million. Looking at the performance of hash rate, hash rate price, and miners’ daily income, the current situation for miners is similar to December 2022, a period widely regarded as the bottom of the bear market.
However, some analysts have a completely different view. “CryptoCity” previously reported that Charles Edwards, founder and analyst of Capriole Investments, listed several indicators suggesting that Bitcoin may actually be at a cyclical peak. 10x Research analysts are also not optimistic about the recent trend, citing ten reasons why Bitcoin may retrace to $55,000.
This article is a collaborative reprint from:
CryptoCity
