Bitcoin (BTC) is currently at a critical juncture in its market cycle. The price of BTC stands at $57,700, showing signs of recovery from last week’s low of $53,600. However, the digital currency is still in a technical downtrend since reaching a record high of $73,800 in March. Recent price movements have formed lower highs at $71,300 and $63,900.
An analysis by CryptoQuant suggests that Bitcoin might be heading towards a major correction or even a prolonged bear market. The profit and loss index is close to its 365-day moving average, a level that has historically preceded significant downward trends. Similarly, the bitcoin bull-bear market cycle indicator is nearing a critical point, indicating a potential shift to a bearish phase.
Another concerning factor is the lack of growth in Tether’s (USDT) market cap, which has historically been associated with Bitcoin price recoveries. The current stagnation in stablecoin liquidity could hinder a significant rally in BTC prices.
On the positive side, Bitcoin whales have been accumulating more BTC during the recent price decline. Large holders have increased their holdings by 6.3% in the past month, the fastest pace since April 2023. This accumulation by whales suggests confidence in a potential future price increase.
In addition, the selling pressure from Germany, which had seized 50,000 BTC from Movie2k in January, is diminishing as the country nears emptying its BTC wallet. This reduction in selling could alleviate some downward pressure on Bitcoin prices.
Looking ahead, the approval of an Ether ETF in the U.S. and the continued growth of U.S. stock indices, historically correlated with Bitcoin, provide optimistic signals for the market. Despite short-term uncertainties, these factors indicate that Bitcoin may experience upward momentum in 2024.