The possibility of a last-minute purchase? Data shows Bitcoin may have bottomed out
While U.S. stocks excel, Bitcoin continues its downward trend, dipping below $60,000 again this morning (4th), touching a low of $57,800. Simultaneously, Bitcoin’s volatility and trading volume continue to decline, with market sentiment swinging back from greed to fear amidst a lack of major catalysts beyond sporadic projects.
However, external media outlet “CoinDesk” reports recent data suggesting Bitcoin’s price might have bottomed out.
Data One: Coinbase Bitcoin Premium Index
The Coinbase Bitcoin Premium Index reflects the price difference between Bitcoin on Coinbase and other exchanges. When Coinbase prices are higher, it typically indicates greater demand from U.S. investors for Bitcoin.
Recently, FalconX research head David Lawant noted a significant negative spread in the Coinbase Premium Index, last seen just before the surge from October to March of the previous year.
According to CryptoQuant data, the Coinbase Premium Index showed negative values for most of May and June this year, akin to the dull consolidation phase of August to September last year. In November 2022, the index plummeted to its lowest point, with Bitcoin’s price around $16,000, regarded as the bear market bottom.
Lawant asserts that the Coinbase Premium Index has become a reliable leading indicator of trends, highlighting significant U.S. investor influence in the Bitcoin market. Given potential future catalysts such as ETFs, U.S. monetary policy, and the presidential election, he believes this trend will persist.
Data Two: Bitcoin Hashrate Decline
Bitcoin hashrate (or hash rate) refers to the computing power used by miners to mine Bitcoin. CryptoQuant data indicates a substantial decline in hashrate since the fourth Bitcoin halving, nearing levels seen during FTX’s bankruptcy. A drop in Bitcoin hashrate typically signifies increased selling pressure from miners, possibly a signal that Bitcoin has bottomed out.
When Bitcoin’s hashrate declines, it indicates miners are unable to profitably mine, leading them to cease mining operations and sell their Bitcoin holdings. Historically, while miner sell-offs may cause short-term Bitcoin declines, hashrate reaching a certain low point often leads to a bottom and subsequent rebound.
Additionally, CryptoQuant’s daily miner income data shows a sharp drop from $79 million on March 6 to $29 million. Looking at hashrate (Hashrate), hashrate price (Hashprice), and miner daily income trends, current miner capitulation resembles December 2022, widely regarded as the bear market bottom period.
Nevertheless, some analysts hold starkly different views. “Crypto City” previously reported Capriole Investments founder and analyst Charles Edwards listing multiple indicators suggesting Bitcoin might currently be at a cycle peak. Meanwhile, 10x Research analysts are cautious about recent trends, citing ten reasons why Bitcoin could drop back to $55,000.
This article is a collaboration from:
Crypto City
