Bitcoin’s (BTC) price has fallen 2.25% over the last 24 hours and is currently 16% below its all-time high of $73,835, reached on March 14.
Bitcoin price is down 8.75% over the last 30 days and 5.5% over the last three months. The BTC price trended low in June and has left market analysts wondering whether the “cycle top” is in for the pioneer cryptocurrency.
Let’s look at some of the reasons why some analysts think that the Bitcoin bull market has peaked.
Bitcoin Long-term Holder inflation rate nears a critical threshold
Capriole Investments founder Charles Edwards said multiple onchain metrics suggest that Bitcoin’s failure to print new highs after two retests is a “sign of weakness.”
In his latest newsletter, Edwards explained that the Bitcoin long-term holder (LTH) inflation rate has increased steadily over the last two years.
According to Glassnode, the LTH market inflation rate measures annualized accumulation or distribution rates over and above daily issuance to miners. Higher values indicate that LTHs are adding to sell-side pressure as their Bitcoin holdings diminish.
At bull market tops, market inflation peaks above nominal inflation – the 2.0 threshold – “which typically marks a high likelihood of the cycle top being in,” says Edwards.
“At 1.9 today, we are too close to that level for my liking.”
Bitcoin Dormancy Flow has been on 3-month increase
Another metric that is useful in determining market cycles and assessing whether Bitcoin is bullish or bearish is Dormancy Flow. It is an onchain metric used to gauge the number of coins being spent relative to the overall trend.
Additional data from Glassnode reveals that the Bitcoin Dormancy Z-score has sharply increased over the last 90 days.
Edwards observed that this metric peaked significantly in April, suggesting the average age of coins spent is significantly higher in 2024. “Peaks in this metric (z-score) typically see cycle tops just three months later,” the analyst explained.
“Well, it’s now three months later. The price has only gone down, and the Dormancy Z-Score peak remains with a structure very comparable to the 2017 and 2021 tops.”
At its current value, the Dormancy Flow Z-score means that Bitcoin is overvalued relative to the sum of coins in a transaction without being backed by trading volume. This suggests that Bitcoin price may have hit a cycle top, which could also be bearish for the broader crypto market.
A spike in Spent Volume could be a Bitcoin top signal
Finally, growing clusters and spikes in Spent Volume help indicate what Edwards calls “areas of growing risk.” Historically, when Bitcoin’s 7-10-year Spent volume grows suddenly, this could be a cycle’s top signal.
Also note, the growing spent volume in 2024 suggests this cycle is progressing fast.
“This chart will blow your socks off and slap you in the face,” Edwards said in a July 2 post on X.
“The entire history of this chart has disappeared because an enormous sum of Bitcoin moved onchain, 10X more than the previous highs.”
Edwards also noted that more than $9 billion worth of Bitcoin has been moved by addresses older than ten years. He attributed this distribution to the recent move by the defunct crypto exchange Mt. Gox as it prepares to repay its creditors later in July.
Swan, a Bitcoin financial services firm, shared a similar sentiment, saying that the market is concerned about the impact of the 142,000 Bitcoin (~$9 billion at current rates) that Mt. Gox creditors will soon release after ten years.
Although “many creditors are long-term holders with payout options, institutional ownership and tax considerations suggest gradual rather than sudden selling pressure, even if all coins hit the market at once,” Swan explained.
In a follow-up X post, the firm added that continued selling by governments adds to the supply-side pressure for Bitcoin.
An earlier report by Cointelegraph reveals that a “German Government (BKA)” labeled cryptocurrency wallet transferred 832.7 Bitcoin (~52 million) in four individual transactions on July 2. According to Arkham Intelligence data, the wallet sent 100 BTC to Coinbase, 150 BTC to Bitstamp and 32.74 BTC to Kraken.
Tracking the selling patterns of Bitcoin whales can give investors valuable cues about the Bitcoin price since large sell orders can signal a market top.