Markets
Bitcoin Price Drops Amid Worries Over Market Cycle Peak, Analyst Says
Bitcoin Price Drops Amid Worries Over Market Cycle Peak, Analyst Says
BitcoinThe price has fallen by 1.35% in the past 24 hours, and is now down 16% from its all-time high of $73,835, which it reached on March 14. Over the past 30 days, Bitcoin has fallen by 9.2%. This downward trend in June has left market analysts speculating whether Bitcoin has reached its “cycle top.”
Charles Edwards, founder of Capriole Investments, highlighted several on-chain metrics pointing to Bitcoin’s inability to reach new highs after two retests, which he interprets as a “sign of weakness.” Edwards emphasized the importance of Bitcoin’s long-term holder (LTH) inflation rate, which has been steadily increasing over the past two years.
According to Glassnode, this metric measures the annualized accumulation or distribution rates of Bitcoin holders relative to the daily issuance to miners. At bull market peaks, market inflation typically exceeds the nominal threshold of 2.0, signaling a high probability of a cycle top. Currently, the LTH inflation rate is at 1.9.
Another important metric, Bitcoin Dormancy Flow, has also been increasing over the past three months. This on-chain metric measures the number of coins being spent relative to the overall trend. Glassnode data reveals that the Bitcoin Dormancy Z-score has increased significantly over the past 90 days. Edwards noted that this metric peaked in April 2024, indicating that the average age of coins spent has increased. Historically, spikes in the Dormancy Z-score precede cycle tops by about three months.
Furthermore, growing clusters and spikes in Spent Volume can signal a market top. Edwards noted that sudden growth in Bitcoin’s 7- to 10-year Spent Volume historically indicates the end of a cycle. He highlighted a dramatic increase in Bitcoin’s on-chain movement in 2024. Edwards attributed part of this movement to the now-defunct cryptocurrency exchange Mt. Gox, which is preparing to pay off its creditors with over $9 billion in Bitcoin.