Several on-chain metrics suggest that Bitcoin's price may have reached a cycle top, a bearish signal for the cryptocurrency market. Capriole Investments founder Charles Edwards highlights three key indicators:
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Bitcoin Long-Term Holder (LTH) inflation rate: This metric, which measures the annualized accumulation or distribution rates of long-term holders, is nearing the critical 2.0 threshold. A value above this threshold typically signifies a high probability of a cycle top.
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Bitcoin Dormancy Flow: This metric measures the number of coins being spent relative to the overall trend. The Dormancy Z-score has sharply increased over the last 90 days, indicating that the average age of coins spent is significantly higher in 2024. This pattern, similar to the 2017 and 2021 tops, suggests a potential cycle top.
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Spent Volume: Spikes in Spent Volume can signal areas of growing risk. The recent surge in Bitcoin's 7-10-year spent volume could indicate a cycle top, particularly as the amount moved onchain is significantly higher than previous highs.
Furthermore, the recent sale of 142,000 Bitcoin by Mt. Gox, combined with potential continued selling by governments, adds to the supply-side pressure for Bitcoin. Tracking the selling patterns of Bitcoin whales can offer valuable insights into market trends.
Key Points:
Bitcoin LTH inflation rate nearing 2.0 threshold, a key indicator for potential cycle top.
Bitcoin Dormancy Z-score peaked significantly, similar to patterns observed at the 2017 and 2021 cycle tops.
Spike in Spent Volume suggests a growing risk and potential cycle top, with the recent move exceeding previous highs.
Mt. Gox releasing 142,000 Bitcoin, combined with potential government selling, adds to supply-side pressure on Bitcoin.
Tracking Bitcoin whale selling patterns can provide valuable insights into market trends.
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