• Despite efforts by Bitcoin whales to accumulate, on-chain metrics from CryptoQuant suggest potential downside risks for BTC.
• The profit and loss (P&L) index hovers near its 365-day moving average, a critical threshold historically associated with major corrections or bear market beginnings.

As the bitcoin price continues to trade under the selling pressure, Bitcoin whales from the United States have started accumulating once again. This is quite evident since the net inflows in the spot Bitcoin ETFs have bounced back significantly over the past week, per the CNF update.

Although the Bitcoin whales have been seeing the fastest accumulation in more than a year, Cryptoquant presents a few on-chain metrics that signal a further downside for the BTC price. As of press time, the bitcoin price is trading 1.05% down at $58,094 with a market cap of $1.145 trillion.

Ever since hitting an all-time high of $74,000 in mic-March 2024, Bitcoin has experienced a strong downtrend and sideways movement. Over the past month, the BTC price has formed a pattern of lower highs and lower lows, thereby hitting a two-month low of $53,500 last week.

While the Bitcoin whales have been trying to stage a recovery for BTC, the continuous selling pressure coming from the German government is playing a spoilsport, per the CNF report.

According to the CryptoQuant report, the profit and loss (P&L) index is currently near its 365-day moving average (MA). The on-chain data provider suggests that a drop below this average could signal a significant correction for Bitcoin, similar to previous downturns observed in the market. It added:

A crossover to the downside has been associated with major corrections (May-July 2021) or the start of a bear market (November-December 2021). See red circles.

Bitcoin Bulls and Bear Market Cycle Indicator

Furthermore, the bull and bear market cycle indicator from CryptoQuant is also approaching a critical level and could switch to the “bear market” if the BTC price continues to decline further. According to CryptoQuant, a crossover below these levels has historically preceded major corrections (May-July 2021) or signaled the onset of a bear market (November-December 2021), as indicated by red circles.

These metrics suggest that Bitcoin is currently at a critical juncture, where it could either form a local bottom or potentially experience a significant correction similar to the events of the summer of 2021.

Furthermore, Tether’s USDT supply and market growth have also stalled suggesting that a rally would be hard since the crypto market rally is directly linked to the stablecoin liquidity. “USDT market capitalization is still slowing down. Bitcoin price typically rallies as more liquidity enters the crypto market via USDT minting, a condition that has still not been met,” noted CryptoQuant.

Benjamin Cowen, founder of the “Into The Cryptoverse” newsletter, notes that from a technical standpoint, Bitcoin faces short-term resistance at $59,000, marked by the 200-day simple moving average, per the CNF update. Since breaching this level on July 4th, the price has remained below it, necessitating bullish action to reclaim it as support and prevent additional declines.