3 reasons why Bitcoin price is at the 'top of the cycle'

Author: Nancy Lubale, CoinTelegraph Compiled by: Deng Tong, Golden Finance BTC price has fallen 2.25% in the past 24 hours and is currently 16% lower than the all-time high of $73,835 set on March 14.

BTC/USD daily chart. Source: TradingView

Bitcoin price is down 8.75% in the past 30 days and 5.5% in the past three months. Bitcoin prices dipped lower in June, leading market analysts to wonder whether the pioneering cryptocurrency had reached a "cycle top."

Let’s take a look at some of the reasons some analysts believe the

Bitcoin bull market has peaked.

Long-term Bitcoin holders Inflation rate approaching critical threshold

Capriole Investments Founder Charles Edwards said that many on-chain indicators suggest that Bitcoin’s failure to hit new highs after two retests is a “sign of weakness.”

Edwards explains in his latest newsletter that the inflation rate for Bitcoin

Long Term Holders (LTH) has been rising steadily over the past two years.

According to

Glassnode, the LTH market inflation rate measures the annual accumulation or distribution rate in addition to the amount issued to miners each day. Higher values ​​indicate that as LTH holds less Bitcoin, they are increasing seller pressure.

At the top of a bull market, market inflation peaks above nominal inflation (2.0), "which typically marks the high threshold for a cycle top," Edwards said.

"It's 1.9 today, we're too close to that level for my liking."

Bitcoin LTH Inflation Rate

Bitcoin Dormant Traffic Increases for Three Consecutive Months

Another Helper in Determining Market Cycles and Assessments An indicator of whether Bitcoin is bullish or bearish is dormant flow. It is an on-chain metric that measures the number of coins spent relative to the overall trend.

Additional data from Glassnode shows that the Bitcoin dormant Z-score has suddenly increased over the past 90 days.

Edwards observed that this metric reached a significant peak in April, indicating that tokens sold in 2024 had significantly higher holding times on average. "The peak of this metric (the z-score) is typically seen three months later at the top of the cycle," the analysts explained.

"Well, it's now three months later. The price has just dropped, and the dormant Z-score peak still maintains a very similar structure to the 2017 and 2021 peaks."

Bitcoin Dormant Z-Score. Source Glassnode

At current values, the Dormant Stream Z-score means that, without support from trading volume, Bitcoin is overvalued relative to the sum of coins in trade. This suggests that Bitcoin prices may have hit a cycle top, which could also be negative for the broader cryptocurrency market.

Surge in spending volume could be Bitcoin’s top signal

Finally, growing clusters and spikes in spending volume help indicate what Edwards calls “an area of ​​growing risk.” Historically, when Bitcoin's 7-10 year spend volume suddenly increases, this can be the highest signal of a cycle.

Also note that the growth in 2024 indicates that this cycle is progressing rapidly.

“This chart will blow your mind and slap you in the face,” Edwards said in a July 2 X post.

"The entire history of this chart has disappeared as a large number of Bitcoins moved on the chain, 10 times more than the previous high."

Bitcoin has a life cycle of 7-10 years. Source: Glassnode

Over $9 billion worth of Bitcoin moved to addresses that are over 10 years old.
1. Mt. Gox’s actions resulted in this distribution.
2. Mt. Gox prepares to pay creditors later in July.
3. Swan believes the market is worried about the impact of Mt. Gox’s 142,000 Bitcoins.
4. Swan explained that while many creditors are long-term holders, institutional ownership and tax considerations suggest selling pressure is gradual.
5. Swan added in a follow-up post that continued government selling is adding to supply-side pressure on Bitcoin.

6. Source: Swan

Cointelegraph An earlier report showed that a cryptocurrency wallet labeled “Germany Government (BKA)” transferred 832.7 Bitcoin in four transactions on July 2 ( Approximately 52 million). According to Arkham Intelligence data, the wallet sent 100 BTC to Coinbase, 150 BTC to Bitstamp, and 32.74 BTC to Kraken.

Tracking the selling patterns of Bitcoin whales can provide investors with valuable clues about Bitcoin price, as large sell orders can signal market tops.

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