As Bitcoin (BTC) reaches highs of $58,487 in early Thursday trading, caution is urged by a leading crypto analyst amidst increasing market activity.
Julio Moreno, Head of Research at CryptoQuant, has pointed out that valuation metrics suggest a bearish outlook for Bitcoin.
Moreno emphasized that Bitcoin is currently in a bear phase and has disconnected from gold as investors opt for a risk-off approach.
CryptoQuant’s recent analysis revealed that the Bull-Bear Market Cycle Indicator has been in a bear phase since Aug. 27, when Bitcoin was priced at $62,000. A significant rally is unlikely until the indicator shifts out of the bear phase.
In addition, the MVRV ratio has dropped below its 365-day moving average since Aug. 26, indicating a potential price correction. Similar scenarios were observed in May 2021, resulting in a 36% Bitcoin decline over two months, and in November 2021, marking the start of the last bear market.
Further bearish signals are seen in Bitcoin long-term holders (LTH) spending at reduced profit margins. The LTH SOPR ribbons have been trending downward since late July, signaling a lack of fresh demand for Bitcoin.
Bitcoin briefly hits $58,000
Driven by a surge in U.S. equities and gains in the Asian share market, Bitcoin surpassed $58,000 in early Thursday trading. U.S. inflation data for August, showing a faster-than-expected rise in core inflation to over 0.3%, has increased expectations of a Federal Reserve rate cut in the near future.
As of the latest update, BTC has risen by 2.18% in the past 24 hours to $58,025. However, spot bitcoin exchange-traded funds (ETFs) in the U.S. experienced outflows on Wednesday after two days of inflows, with a total loss of $43 million.