The Bitcoin (BTC) price has fallen by 2.25% over the last 24 hours and is currently 16% below its all-time high of $73,835 recorded on March 14.
Bitcoin price has fallen by 8.75% over the past 30 days and by 5.5% over the past three months. The BTC price has been trending lower in June, and market analysts are questioning whether a “cycle top” is coming for the pioneering cryptocurrency.
Let’s take a look at why some analysts think the Bitcoin bull market has peaked.
Bitcoin Long-Term Holders Inflation Rate Approaches Critical Level
Capriole Investments founder Charles Edwards said Bitcoin’s failure to make a new all-time high after two retests was a “sign of weakness” according to several on-chain metrics.
In a recent newsletter, Edwards explained that the long-term Bitcoin (LTH) inflation rate has been steadily increasing over the past two years.
According to Glassnode, the LTH market inflation rate measures the annual accumulation or distribution rate compared to the daily issuance to miners. A higher value indicates that LTH is experiencing increasing sell-side pressure as Bitcoin holdings decrease.
“At the top of a bull market, market inflation peaks above nominal inflation (the 2.0 threshold), which generally indicates that the cycle peak is likely approaching,” Edwards said.
“1.9 today is too close to that level for my taste.”
Bitcoin dormant flows have been increasing for 3 months.
Another useful indicator for determining market cycles and assessing whether Bitcoin is bullish or bearish is the dormant flow, which is an on-chain metric used to measure the number of coins being spent relative to the overall trend.
Additional data from Glassnode shows that Bitcoin’s dormant Z-score has increased dramatically over the past 90 days.
Edwards observed that this metric peaked significantly in April, suggesting that the average age of coins used in 2024 will be significantly higher. “The peak of this metric (z-score) typically occurs just three months after the cycle peak,” the analyst explained.
“Well, it’s been three months now. The price has only gone down, and the dormant Z-score peaks are still very similar in structure to the 2017 and 2021 peaks.”
At current value, the Dormancy Flow Z-score means that Bitcoin is not supported by trading volume and is overvalued relative to the total number of coins in circulation. This suggests that Bitcoin price may have reached a cycle peak, which could be bearish for the broader cryptocurrency market.
Related: How long will Bitcoin’s price consolidation last?
A surge in spending could be the best signal for Bitcoin.
Finally, clusters and spikes in spend volume help to indicate what Edwards calls “areas of increasing risk.” Historically, when Bitcoin spend volume increases suddenly over a 7-10 year period, this can be a signal of a cycle’s peak.
Additionally, the increasing spending in 2024 suggests that this cycle is accelerating.
“This chart will blow your mind and smack you in the face,” Edwards wrote in a July 2 post on X.
“The entire history of this chart has been wiped out because Bitcoin has moved 10x more on chain than its previous all-time high.”
Edwards also noted that $9 billion worth of bitcoin had been moved to addresses that were more than 10 years old. He attributed the distribution to recent moves by the shuttered cryptocurrency exchange Mt. Gox, which is preparing to pay off its creditors in late July.
Swan, a Bitcoin financial services firm, shared similar sentiments, saying the market is concerned about the impact of Mt. Gox’s bondholders releasing 142,000 Bitcoins (worth about $9 billion at current exchange rates) soon after the company was forced to release them after a decade.
“While many of the bondholders are long-term holders with a payment option, institutional ownership and tax considerations suggest a gradual rather than sudden selling pressure even if all the coins hit the market at once,” Swan explained.
The company added in a follow-up X post that the government’s continued selling was putting increasing supply-side pressure on Bitcoin.
According to a previous report by Cointelegraph, a cryptocurrency wallet labeled “German Government (BKA)” transferred 832.7 bitcoins (around $52 million) in four separate transactions on July 2. According to Arkham Intelligence data, the wallet sent 100 bitcoins to Coinbase, 150 bitcoins to Bitstamp, and 32.74 bitcoins to Kraken.
Tracking the selling patterns of Bitcoin whales can provide investors with valuable clues about the Bitcoin price, as large sell orders can signal a market peak.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.