Bitcoin is not expected to retest the record until later this year, but data suggests the correction could get worse before a recovery begins. This is similar to how the cryptocurrency has fluctuated between two all-time highs in 2021. CryptoQuant’s Bitcoin Profit and Loss Index, a Bitcoin valuation indicator, is currently hovering around its own 365-day moving average. This key threshold helps traders determine if Bitcoin is in a bull or bear market. Historically, when the index crosses over downwards, we have seen major corrections, such as between May and July 2021 and between November and December 2021 in the same year. But at the same time, traders’ margins have become extremely negative, which can be seen as a potential signal of a bottom. “Bitcoin is at a level where a local bottom may form or a major ‘Summer 2021′ style correction may occur,” said Julio Moreno, head of research at CryptoQuant. “Traders’ unrealized margin is now at -17%, the most negative since shortly after the collapse of the FTX exchange in November 2022,” he added. “Prices usually bottom when traders’ margins reach extremely negative levels like we’re seeing now.” Bitcoin has now retested the key support of $57,000 for three consecutive days after dropping below that level last week. The flagship cryptocurrency’s price has been sluggish since hitting a record of over $73,000 in March before quickly correcting. Since then, the cryptocurrency has struggled to return to higher highs. Despite the price calm, Bitcoin demand has been trending upward since May, driven by an increasing number of whales holding the cryptocurrency. However, Bitcoin network activity shows that the token still faces headwinds. “Stablecoin liquidity has yet to accelerate, which is a necessary condition for price growth,” Moreno said. “The stablecoin market has seen some positive developments so far in 2020, but [USD Coin]Lack of corresponding growth in USDT [Tether] The market cap could slow or weaken the chances of a significant upside in Bitcoin price. Additionally, mid-sized and large Bitcoin miners are still selling off parts of their holdings.”
Bitcoin May Be Heading for a ‘Summer 2021’ Correction, Data Shows
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