According to analysis firm CryptoQuant, Bitcoin has entered a short-term consolidation phase with mild downside risk, amid a pause in market upward momentum.
General Trends in the Bitcoin Market
The report states that the market entered a 'bullish break' after Bitcoin reached an all-time high of $123,000 in June.
CryptoQuant also noted that its Bull Score Index, which measures market strength, fell from 80 to 60. Despite this decline, the overall outlook remains positive, though it indicates a weakening market momentum.
Market Indicators and Reasons for Weakening
Bitcoin has entered a pause period in the bull market. The decline in the index reflects both profit-taking and the seasonal decline in trading volume seen during summer months. The report warns that a drop below 40 could signal a bear market for the first time since April 2023.
On-chain indicators also confirmed this weakening. The stagnation of stablecoin liquidity, in particular, suggests a decline in new capital inflows into the market. While Tether (USDT) liquidity increased by $9.6 billion over the past 60 days, this growth has reportedly slowed and is now below trend.
Need for New Catalysts for Growth
The on-chain profit margin signal has turned red, indicating that investors have made significant profits recently and that unrealized profits are now decreasing. This signals a classic period of profit-taking.
The report stated that Bitcoin needs new catalysts to continue its upward trend. When asked what this catalyst might be, CryptoQuant Research Director Julio Moreno responded:
CITE_W_A: 'The Fed’s interest rate cut at its September meeting, a development that markets have been waiting for a long time, could be a strong upward catalyst.'
The analysis from CryptoQuant highlights the current risks and prospects of Bitcoin in the market. A lack of new catalysts may influence the further development of the situation.
