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Highlights
- Stablecoin market cap and exchange reserves at ATH levels, signaling prior buy-side liquidity usage.
- Negative Coinbase premium and low fiat USD inflows indicate lack of momentum for price rise.
- Spot ETFs performance is negative; political uncertainty and miner capitulation add market pressure.
According to the Founder & CEO of CryptoQuant, Ki Young Ju, Bitcoin’s price is currently shaped by three key buy-side liquidity channels: fiat currencies, stablecoins, and spot-based ETFs. These factors are affecting the market trend and impacting the cryptocurrency price up to June.
Stablecoins as a Liquidity Channel
Current statistics show that the stablecoin market cap has risen, but it is still relatively close to earlier ATHs when measured against the BTC market cap.
Ki Young Ju, a market analyst, said that the stablecoin exchange reserves ratio is quite similar to these ATH levels as well. This indicates that stablecoins have already been used in the buy side liquidity and further large price movements may require more inflows of stablecoins to kick start another major upswing.
Concurrently, for the past week, the Coinbase premium has been negative, and this can be attributed to the overall market sentiment as well as the absence of strong fiat inflows that would help push the price of Bitcoin up. This trend shows that it is difficult to sustain the growth trajectory without fresh fiat capital injections.
Spot ETFs and Bitcoin Market Sentiment
Spot ETFs have been negative in performance for the past two weeks, in the net average. Analysts believe that there may be a resurgence of these ETFs since Bitcoin may clear some of the political risks associated with the upcoming events in the year. However, Bitcoin suffered a significant fall of 6.26% in one day which was the highest single day fall in almost 100 days.
This has made the experts in the market to raise questions on the possibility of buying opportunities that are currently available considering the past performance of Bitcoin after similar declines.
Some emphasize the oversold territory of Bitcoin’s Relative Strength Index (RSI) indicating a possible price rebound. From the past two years, it has been depicted that prior to such major price rally, the RSI has been at similar levels.
Others, like Samson Mow, highlight that the current price movements are driven more by sentiment and fear rather than substantial sell-offs from large holders. Mow stated,
“Everyone selling Bitcoin now will regret it within a year. I’m talking ‘biggest mistake of my life’ level regret. Deathbed lamentation level regret.”
Political Influence and Predictions
It is also anticipated that political events would also affect the future price of Bitcoin. The upcoming US presidential election is a factor of concern in the market. The former US President, Donald Trump, has endorsed Bitcoin mining and clearly stated that he would be willing to receive political contributions in the form of cryptocurrency.
Trump’s stance contrasts with the current administration’s approach. President Joe Biden’s re-election campaign has been reaching out to the crypto industry for guidance on digital asset policies, marking a shift from his administration’s previously less favorable stance on cryptocurrency.
According to, CryptoQuant’s Exchange Flow Multiple for Bitcoin has declined to a significantly low value of below 0. 6, suggesting low levels of speculative demand in the market. This level has been previously seen at the $30K mark after which the growth was generally noted to continue.
Furthermore, miners and long-term holders are likely to sell, coupled with the negative Coinbase premium. This pressure coupled with the difference in the entry level prices of the traders and the absence of new fund inflow in the ETFs and custody wallets is the reason behind the bearish trend of the market. Some market participants also pointed out that the demand for Ethereum is higher than for Bitcoin, which may mean that an altcoin season has begun.
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