Amidst a robust performance by the U.S. stock market, Bitcoin has been on a downward trend, with its value dipping below the $60,000 mark this morning (4th), reaching a low of $57,800. Concurrently, Bitcoin’s volatility and trading volume have been on a decline, with the market lacking significant speculative themes, leading the cryptocurrency fear and greed index to revert to a state of fear.
Despite this, a report by the cryptocurrency media outlet CoinDesk suggests that recent data may indicate that Bitcoin’s price has bottomed out.
**Data Point One: Coinbase Bitcoin Premium Index**
The Coinbase Bitcoin Premium Index reflects the price difference of Bitcoin on Coinbase compared to other exchanges. A higher price on Coinbase typically signifies greater demand for Bitcoin among U.S. investors.
David Lawant, the research director at FalconX, noted that the Coinbase Premium Index has shown significant negative values recently. The last occurrence of a similar situation was months before the surge from October last year to March this year.
Data from CryptoQuant reveals that the Coinbase Premium Index was negative for most of the time between May and June this year, similar to the period between August and September last year, which was a consolidation phase for the Bitcoin market. In November 2022, the index hit a low, with Bitcoin’s price around $16,000, considered the bottom of the bear market.
Lawant believes that the Coinbase Premium Index has become a reliable and leading indicator for trend analysis, highlighting the significant influence of U.S. investors in the Bitcoin market. Considering potential catalysts like ETFs, U.S. monetary policy, and presidential elections, he expects this trend to continue.
**Data Point Two: Bitcoin Hash Rate Decline**
Bitcoin’s hash rate, or computational power used by miners to mine Bitcoin, has seen a significant drop since the fourth Bitcoin halving, nearing the lowest levels during the FTX bankruptcy. A decline in hash rate typically indicates increased selling pressure from miners, which could be a signal for Bitcoin reaching its bottom.
A decrease in hash rate means miners are not profitable, leading them to cease mining operations and sell their Bitcoin holdings. Historically, while miner sell-offs can cause short-term price drops, Bitcoin usually rebounds after the hash rate hits a certain low.
CryptoQuant’s data on miners’ daily revenue also shows a steep decline from $79 million to $29 million since March 6th. The current surrender of miners, as indicated by the hash rate, hash price, and daily revenue, resembles the situation in December 2022, which was widely considered the bottom of the bear market.
However, some analysts hold starkly different views. Crypto City previously reported that Charles Edwards, founder and analyst at Capriole Investments, listed several indicators suggesting that Bitcoin might actually be at the top of its cycle. Similarly, analysts at 10x Research are not optimistic about the recent trend, citing ten reasons why Bitcoin might fall back to $55,000.
This article is a collaborative reproduction from:
Crypto City