Bitcoin Demand and Stablecoin Growth: Metrics to Watch for Crypto Recovery

Bitcoin Demand and Stablecoin Growth: Bitcoin’s Support Levels and Market Dynamics

Bitcoin Demand– Analysts at market intelligence platform CryptoQuant have highlighted on-chain metrics that suggest Bitcoin (BTC) may have reached its bottom and could be poised for a rally.

In their latest weekly report, CryptoQuant mentioned indicators such as increased bullish momentum, growing demand for BTC, and accelerated growth in stablecoin liquidity as key signals to monitor.

Increased Bullish Sentiment

CryptoQuant’s Bitcoin Bull-Bear Market Cycle indicator currently indicates that the cryptocurrency market is experiencing its least bullish phase since March 2023, coinciding with the U.S. banking crisis.

With BTC currently hovering around $61,000 and recently dipping to a one-month low of $58,500 earlier this week, there is a need for bullish momentum to drive price recovery. This requires CryptoQuant’s Bull-Bear Market Cycle indicator to surpass its 30-day simple moving average.

Moreover, for prices to rebound, growth in Bitcoin demand must accelerate to levels seen in the first quarter of the year. Although there has been some recovery in demand since May, it remains notably slower compared to earlier in the year, particularly following the launch of U.S. spot Bitcoin exchange-traded funds (ETFs).

Increased purchasing by long-term Bitcoin holders may indicate that the price of the leading digital asset has reached its lowest point. Currently, these investors are acquiring BTC at a rate of 72,000 BTC per month, significantly lower than the 160,000 BTC per month seen in the first quarter. Although there has been a slight recovery from the May rate of 68,000 BTC, substantially higher purchases are necessary for prices to resume an upward trend.

Potential Significant Adjustment

Bitcoin’s critical price support level is set at $56,000, as determined by Metcalfe price valuation bands, which previously acted as resistance and peak levels in past cycles. A drop below this support could potentially trigger a significant correction, leading to further value erosion in the market. Therefore, this level may determine whether Bitcoin has reached its bottom.

Additionally, positive unrealized profit margins among traders on-chain could indicate forthcoming market rallies. An increase in Bitcoin transfers from other exchanges to Coinbase suggests rising demand from U.S. investors, typically associated with higher prices.

Lastly, an uptick in stablecoin liquidity, often reflected in the 60-day growth of Tether’s (USDT) market capitalization, signifies an influx of capital into the market – a critical indicator necessary for price movements to trend upwards.

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