Bitcoin, the leading cryptocurrency, made waves when it broke $63,000 on June 30. However, the joy was short-lived as the currency quickly pulled back, sparking a fierce debate about its trajectory. Even as momentum is gaining, skeptics argue Bitcoin’s swells of overvaluation might finally catch up with it.
The suspicion is led by one specific analyst, who argues that Bitcoin may be due for a chill spell, predicting an extension of the 18% plunge it experienced in June. In forming this conclusion, several factors were taken into account, namely time, the number of active Bitcoin addresses, and the hash rate.
This prognosis has left Bitcoin enthusiasts wringing their hands in worry, fearing their bullish expectations may come crashing down. Currently, Bitcoin is finding itself ensnared within a multi-week range, with caps at all-time highs and support established at a respectable $56,800 in May.
Yet when one surveys the landscape of current price activity, there’s a prevailing sense that the buyers, despite the lower lows encountered in May when prices pierced the $60,000 barrier, still maintain the upper hand.
Strikingly, after making impressive strides during the first quarter of 2024, Bitcoin has found itself cocooned within a bullish flag. Alas, the buyers’ inability to lock in the mid-March heights has put a damper on the upward climb.
The failure to cross the $74,000 line from the daily chart and the resolute $72,000 liquidation barrier are notable setbacks. However, in the near term, a significant breakout above $66,000 could flip the trend, especially if it is accompanied by an upward surge in trading volume.
Adding to the unease is the recent move by the German government on July 1, which saw a transfer of 1,500 BTC, valued at over $94 million. Tracking data shows 400 BTC sent to three exchanges, including Bitstamp. What may send shivers down the spine of Bitcoin enthusiasts is the revelation that the German government may be preparing to offload the coins. Currently, this category of buyers holds a portfolio of 44,000 BTC, equivalent to over $2.5 billion.
Yet, in the face of these challenges, some remain bullish about Bitcoin’s prospects. An analyst notably argued that Bitcoin is ripe for major gains, alluding to the correlation between the United States M1 money supply and Bitcoin prices. Proponents pointed out that Bitcoin hasn’t reached a new all-time high relative to the M1 money supply in over six years.
However, considering Bitcoin’s strong performance since mid-2023, optimists believe the tides are set to turn. Bulls could take control, leading the cryptocurrency to fresh all-time highs.
