Bitcoin is plugging the bleed of last week, stabilizing at spot rates, but still stuck within a bearish formation. Unless there is a conclusive close, ideally above $60,000, sellers will still dominate price action in the short to medium term.
Is Bitcoin Preparing To Race Higher?
Amid this state of affairs, especially after last week’s sharp dump that pushed BTC to as low as $53,500, there is optimism. One trader thinks Bitcoin is preparing to bounce higher, as the Puell Multiple indicator hints. The tool is crucial to gauge miner profitability at all price points, determining whether it is over or under-valued.
Citing CryptoQuant data, the analyst is convinced the Bitcoin market is bottoming, and last week’s crash was a climactic end of the June leg down. Through the Puell Multiple indicator, users can project whether a correction is ending or just beginning.
Historically, when the indicator falls, it could be a good signal, especially for traders timing price bottoms in a bear market. With bottoms, picking out the beginning of a bull cycle can be easy.
The Puell Multiple indicator is falling, following the same script as seen in 2016 and 2020 before prices erupted. This formation suggests that the current leg down, which has forced hundreds of millions of long liquidations, is ending. Even so, whether the bull run is in its early stage remains to be seen.
So far, Bitcoin is stable, adding 7% from July 2024 lows. Even though there is hope, the break below May and June 2024 lows last week mean bears are in control.
For the uptrend to resume, and as mentioned earlier, bulls must close above $60,000. However, for conservative traders, a conclusive close above $66,000 and $72,000 could signal a major shift in trend. In that event, Bitcoin could retest and even break $73,800.
USDT Liquidity Rising But BTC Supply Spike Deflating Bulls
Confidence remains high for now. One analyst notes that the USDT liquidity is rising in early Q3 2024. Usually, whenever stablecoin liquidity rises, it could mean interest in riskier assets like BTC and crypto is on the rise.
The failure of prices to rise immediately could be due to the spike in supply as the German government unloads. Once this overhang is absorbed, the uptrend will resume.
The good news for bulls is that spot Bitcoin exchange-traded fund (ETF) issuers have been buying as Germany offloads. As of July 8, SosoValue data shows that all spot ETF issuers added $294 million worth of BTC, with BlackRock leading the pack.
Feature image from Canva, chart from TradingView
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