Bitcoin has fallen since hitting a new high of $64,000 in April and has been trading around $30,000 for almost a month. Hopes of a return to the bull market look slim. Analysts at JPMorgan point to a key indicator of whether there is any chance of further gains in the cryptocurrency market.
In an interview with CNBC on June 29th, J.P. Morgan analyst Nikolaos Panigirtzoglou said that if Bitcoin’s market dominance rebounds above 50%, it could signal recovery and could bring an end to the recent weakness. He explained:
A healthy number there, in terms of the share of bitcoin as a percentage of the total cryptocurrency market cap, is 50% or above. I think that’s another indicator to watch here in terms of whether this bear phase is over or not.
“ It was like 60% back in the beginning of April,” the JPMorgan analyst recalled, adding that Bitcoin’s relatively low market share was a negative signal that suggests interest in BTC remains relatively subdued. However, Panigirtzoglou pointed out that Bitcoin’s market share had risen in recent weeks.
According to CoinMarketCap, the total market value of cryptocurrencies is about $1.4 trillion, and Bitcoin is worth $645 billion, amounting to just 45 percent.
So how is the cryptocurrency market now? We will give an analysis in two angles below.
Bitcoin’s whale addresses holding between 100 to 10k BTC kicked off July with a 60k BTC accumulation spike, the highest daily spike of 2021. These addresses hold 9.12M coins combined after holding 100k less BTC just 6 weeks ago.
The whale addresses have been buying Bitcoin since the fourth quarter of 2020 and selling it in the first quarter of 2021. An unprecedented number of new institutional whales entered the market, and their purchases added further momentum to the bullish Bitcoin price movement, but by February the ” speculative whales” had already started to make a profit and then sold large amounts of tokens to the market.
The ratio of Bitcoin’s supply on exchanges has encouragingly slid down to its lowest since early January. The 6-month low is a promising sign, as it generally will indicate that there is a decreased risk of more major BTC selloffs.
Exchange-flow data is an important metric for monitoring Bitcoin’s price trajectory in the short to medium terms. Net inflows often foretell a steep selloff as more investors transfer their holdings from cold wallets, possibly for the purpose of selling.
Exchange inflows began to spike in early May, which likely served as a precursor to Bitcoin’s steep selloff through the middle of the month. The Bitcoin selloff intensified on May 19, culminating in a $1.2 trillion decline for the entire cryptocurrency market.