Recent Bitcoin market sentiment has been somewhat subdued, but two analysts have differing views. One believes that Bitcoin has not entered a bear market, while the other suggests that the bullish prospects for Bitcoin should be observed over the next few weeks.
Bitcoin has been hovering around $58,000 recently, with the cryptocurrency fear and greed index at around 40, indicating a moderate level. The market is waiting to see if Bitcoin can return to a raging bull market after the Federal Reserve announces its interest rate decision next week.
Prominent cryptocurrency analyst Willy Woo tweeted that since the Bitcoin halving in April, both demand and supply have shown a bearish trend. However, in the past four weeks, signs of a reversal have emerged (yet to be confirmed), but more time may be needed to break historical highs. He also pointed out that Bitcoin has not yet entered a bear market and is currently in a phase of accumulation.
OnchainTarek, an on-chain analyst at CryptoQuant, also stated in an article titled “Bitcoin’s Next Bull Market?” that there are several indications of a potential price breakthrough:
1. Decrease in Bitcoin reserves on exchanges: The significant reduction in Bitcoin reserves on exchanges usually precedes a price increase. This suggests that investors are moving Bitcoin to cold wallets, limiting the available supply in the market and reducing selling pressure. Historical data shows that this phenomenon often indicates a price peak, and a similar situation may be occurring now.
2. Increase in stablecoin reserves: At the same time, the amount of stablecoins held on exchanges is continuously growing, indicating that investors are preparing to enter the market. Stablecoins represent funds that can be deployed at any time, and their increase demonstrates strong buying intentions.
3. Bullish market setup: The decrease in Bitcoin reserves and the increase in stablecoin reserves lay the foundation for a potential price breakthrough. With decreasing Bitcoin supply and increasing buying power, the market is prepared for a price increase. Historically, supply-demand imbalances have often led to significant price rises.
In conclusion, the decrease in Bitcoin reserves and the increase in stablecoin reserves indicate bullish prospects for Bitcoin. With tightening market supply and increased buying power, we may be on the verge of a price increase, and investors should closely monitor potential market breakthroughs in the coming weeks.
As for whether now is a good time to enter the Bitcoin market, based on Bitcoin’s monthly return rate, it can be observed that in the past 11 years (from 2013 to 2023), Bitcoin’s performance in September has usually been poor, with 8 instances of a decline, with a high probability of 73%. Additionally, September has the highest average monthly decline of 4.78%. However, October is typically a month of upward movement, so non-leveraged investors may consider buying on dips in September.
Apart from overall economic risks, according to Arkham Intelligence data, Mt. Gox still holds over 40,000 BTC in its wallets, despite repaying most of the Bitcoin. The ongoing repayments may still pose risks to the price. Furthermore, the US government transferred nearly $600 million worth of Bitcoin related to Silk Road in mid-August, and it is currently unclear whether it is for custody or preparation for sale, which is also a detail worth monitoring.