Bitcoin (BTC) Sees Largest Pullback of Cycle Before Significant Recovery

Bitcoin
(BTC)
recently
experienced
its
most
significant
pullback
of
the
current
cycle,
dropping
33.32%
from
its
all-time
high
of
$73,666,
according
to
Bitfinex
Alpha.
The
cryptocurrency’s
price
plummeted
to
nearly
$49,000,
marking
the
lowest
level
since
February,
before
rebounding
by
almost
28%
to
climb
back
above
the
crucial
$60,000
threshold.

Market
Metrics
and
Indicators

Key
metrics
such
as
the
Mayer
Multiple,
which
compares
Bitcoin’s
current
price
to
its
200-day
moving
average
(200DMA),
dropped
to
0.88
during
the
recent
downturn.
This
level,
not
seen
since
the
FTX
collapse
in
November
2022,
indicates
a
strong
bearish
phase
as
Bitcoin
traded
significantly
below
its
average
historical
trend.

On-chain
metrics
further
underscore
the
intensity
of
the
sell-off.
The
Short-Term
Holder
Realized
Price
(STH
Cost-Basis),
reflecting
the
average
purchase
price
of
recent
buyers,
currently
stands
at
$64,860.
Bitcoin’s
spot
price
recently
approached
the
-1
standard
deviation
(SD)
band
below
this
STH
Cost-Basis,
a
rare
occurrence
historically
seen
in
only
about
7.1%
of
trading
days.
This
highlights
the
severity
of
the
current
market
conditions.

The
Short-Term
Holder
MVRV
ratio,
which
compares
the
current
market
price
to
the
purchase
price
for
newer
investors,
shows
that
this
group
is
holding
the
largest
unrealized
losses
since
the
bear
market
lows
of
2022.
These
metrics
underline
the
deep
bearish
sentiment
and
stress
among
short-term
investors,
which
typically
occurs
at
local
bottoms.

Broader
Economic
Context

The
US
economy
continues
to
display
resilience,
with
recent
data
offering
a
more
optimistic
outlook
despite
ongoing
concerns
of
a
potential
slowdown.
Last
week,
a
significant
drop
in
jobless
claims
and
a
steady
rise
in
wholesale
inventories
provided
a
solid
foundation
for
economic
growth,
particularly
in
the
second
quarter.

Household
debt
levels
in
the
second
quarter
edged
up
slightly,
highlighting
a
growing
financial
burden
on
consumers.
However,
with
delinquency
rates
remaining
stable,
borrowers
are
still
supporting
economic
activity,
albeit
with
some
signs
of
strain.
The
slower
pace
of
credit
usage
and
rising
financial
stress
hint
at
a
potential
deceleration
in
consumer
spending,
which
could
temper
economic
growth
unless
the
Federal
Reserve
considers
adjusting
interest
rates.

Adding
to
the
mixed
economic
signals,
the
US
services
sector
experienced
a
notable
rebound
in
July,
recovering
from
a
four-year
low
as
new
orders
surged
and
employment
within
the
sector
grew
for
the
first
time
in
six
months.
This
resurgence
in
services
may
help
ease
fears
of
a
recession,
particularly
in
light
of
the
recent
spike
in
unemployment
and
continued
stock
market
volatility.

Crypto-Sphere
Developments

In
the
latest
news
from
the
crypto-sphere,
Kamala
Harris
has
emerged
as
the
frontrunner
in
the
2024
US
presidential
race,
leading
Donald
Trump
by
a
narrow
margin
in
both
betting
odds
and
recent
polls.
As
her
campaign
gains
momentum,
there
is
growing
speculation
about
her
potential
stance
on
cryptocurrency,
particularly
as
her
team
has
begun
engaging
with
industry
executives.
This
engagement
hints
at
the
possibility
that
cryptocurrency
policy
may
become
a
focus
in
the
coming
months,
sparking
interest
and
anticipation
within
the
crypto
community.

Simultaneously,
major
financial
institutions
like
BlackRock
and
Nasdaq
are
making
strides
in
the
digital
asset
market.
They
have
recently
filed
a
request
with
the
US
Securities
and
Exchange
Commission
(SEC)
to
introduce
options
trading
for
BlackRock’s
spot
Ethereum
ETF.
This
move
follows
the
SEC’s
approval
of
Ethereum-linked
ETFs
from
several
prominent
firms,
signaling
a
significant
expansion
in
investment
options
for
digital
assets.
As
these
developments
unfold,
the
SEC
continues
to
play
a
pivotal
role
in
shaping
the
cryptocurrency
landscape,
evidenced
by
its
recent
decision
to
delay
approval
of
Hashdex’s
proposed
ETF,
which
aims
to
directly
hold
spot
Bitcoin
and
Ether.
The
postponement
extends
the
review
period
until
September
30,
2024,
reflecting
the
SEC’s
cautious
approach
as
it
meticulously
evaluates
the
implications
of
new
digital
asset
products
on
the
market.

For
more
details,
visit

Bitfinex
Alpha.

Image
source:
Shutterstock