Bitcoin Cools After Record High, Onchain Data Suggests Weaker Momentum
Bitcoin's recent surge to an all-time high appears to be slowing, according to analysis from onchain data firm CryptoQuant. The cryptocurrency, which climbed past $123,000 last month, is now showing signs of consolidation and potential downside risk.
Bull Score Index Signals Softer Sentiment
CryptoQuant's report highlights a decline in the Bull Score Index�a metric using onchain indicators to assess market sentiment�from 80 to 60. Higher index values signify strong buying momentum, while lower points reflect increased selling pressure. Despite the drop, the index remains in bullish territory, but the softer reading suggests fading momentum. The firm attributes this mood shift to recent profit-taking and reduced market activity typical during the summer months.
Liquidity and Profit-Taking Trends Emerge
- Stablecoin Liquidity: CryptoQuant notes stablecoin liquidity has stalled, with the signal turning red. This suggests a slowdown in new capital entering the market�a potential warning sign of weakening buying power. Although Tether (USDT) liquidity rose by $9.6 billion in the past 60 days, the growth rate has decelerated and now lags behind previous trends.
- Profit Margins: The firm�s onchain profit margin signal has also turned red, indicating that many traders have recently cashed out gains and are not holding substantial unrealized profits. This pattern is consistent with a round of profit-taking following the move to record highs.
Potential Catalysts for Renewed Growth
To reignite bullish momentum, CryptoQuant suggests that new catalysts may be needed. Julio Moreno, CryptoQuant�s head of research, flagged a potential U.S. Federal Reserve rate cut in September as one development markets are monitoring.
Current Market Position
As of now, Bitcoin is trading around $116,340, representing a 0.8% gain over the previous 24 hours. If weakness persists, CryptoQuant warns that the Bull Score Index could drop below 40�a level not seen since April 2023�which would formally indicate bearish market conditions.
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