CoinDesk Reports:
The market is confirming a flashing warning signal of a potential Bitcoin price drop, as predicted by former chief analyst James Check of blockchain analytics firm Glassnode.
In his bi-weekly newsletter checkonchain, Check explained that several indicators are aligning for a downturn in prices. Bitcoin has dropped 6% this week to $58,000, extending last week’s sell-off, thereby validating Check’s thesis.
Having analyzed numerous charts, Check noted that most traders exhibit a net long bias, often a bearish signal. He added that the majority of short-term holders are underwater, facing unrealized losses totaling $21 billion. Today, this figure is even higher due to market declines and an additional $300 million in liquidations.
Just days before today’s sell-off, Check warned, “We are potentially in a moment facing greater pressure.” He told The Defiant that his analysis aims not to predict prices—a practice he claims “is not a useful exercise”—but rather to outline broader market trends.
BTC Short-Term Holder Supply Loss
Check predicts a “choppy” development ahead, a sentiment echoed by many other analysts.
Renowned cryptocurrency trader Scott Melker explained that his technical analysis suggests Bitcoin is bottoming out, albeit as a process. The independent analyst added that in the foreseeable future, the asset might continue its sideways consolidation.
“If we can see a turnaround again at this moment, that would be fantastic,” he wrote. Yesterday, Melker explained that the market is approaching signals he has been monitoring: daily candle prices nearing below $60,300. A recovery would provide an optimistic divergence and potentially clear the runway.
“Just looking for entry points”
While technical analysis isn’t an exact science, it can aid in forecasting trends in highly transparent markets like Bitcoin.
However, Taras Kulyk, CEO of SunnySideDigital, a Bitcoin mining company, holds a different view.
He told The Defiant, “Most are probably trying to flush out negative sentiment to better enter BTC positions.” Kulyk suggested that institutional interest in the ETF space should be a more fitting perspective for investors to focus on.
Yet, data from the Bitcoin ETF sector aligns more with the outlook of Check and Melker than Kulyk’s optimism. Excluding a significant inflow of funds earlier in June, recent weeks have seen inflows troubled amidst sell-offs, indicating the market has yet to decisively pick a direction.
Bitcoin ETF Net Flows
As repeatedly emphasized by Melker, the market may be in a “midsummer lull,” though James Butterfill of CoinShares previously stated data does not necessarily support the concept of a summer slump.
Washing is ongoing, but Check remains confident
Check remains unconcerned about the possibility of a bear market—others have suggested such a scenario.
What “gives him a bit of confidence” is that Bitcoin’s unrealized losses have not yet reached mid-2021 levels when Bitcoin sparked a prolonged downturn, ultimately trading at $16,000.
However, he is patiently awaiting potential further declines, particularly to wash out those who believed $73,000 was the peak of the cycle.
“This is why we ultimately want to see coins distributed at lower costs,” he said.