Sluggish liquidity and profit-taking indicate that Bitcoin is consolidating: Cryptoquant
After reaching a record high of $123,000, Bitcoin’s explosive rise has slowed, entering what Cryptoquant’s Institutional Insights report refers to as a “bullish cooldown” phase. Although it was still within bullish area, the firm’s Bull Score Index dropped from 80 to 60, indicating diminishing momentum.
This slowdown was fueled by weakening onchain trends, according to researchers. On Cryptoquant’s screen, stablecoin liquidity growth, a crucial indicator of new capital, has decreased and turned red. A lower short-term demand from investors is shown by the slowing of network activity and the easing of Bitcoin inflows to leading exchanges like Coinbase.
Excessive profit-taking is also involved. The onchain profit margin indicator for traders on Cryptoquant turned red, indicating that many players had already locked in big gains and now had fewer unrealized earnings. These elements, along with the market’s usual summer hiatus, are influencing the present consolidation phase.
Right present, valuation indices are circling a crucial bull-bear turning point. The MVRV Z-score, P&L Index, and Bull-Bear Cycle Market Indicator are all at levels that could be pushed into bearish territory by any more price decline. According to Cryptoquant researchers, the Bull Score Index may go below 40 for the first time since April 2023 if that occurs.
The company characterizes the outlook as cautiously neutral for the time being. Although the overall market cycle remains optimistic, prices may stabilize or slightly retreat due to profit-taking, slowing liquidity expansion (particularly, tether’s (USDT) growth slowed to $9.6 billion over 60 days), and weakening momentum.
The market is exposed at this point and needs new bullish catalysts to jump-start the next wave higher, according to cryptoquant researchers.
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