Bitcoin has been trending higher at spot rates, surpassing $63,000 on June 30 before it dropped back down again. Even though the momentum is picking up, the coin’s price action is a matter of debate. Still, some are skeptical, thinking a potential overvaluation could be the cause.
Analyst: Bitcoin is overvalued, here's why
In a post on X, an analyst logic There is a possibility that the coin could cool down, continuing the 18% drop recorded in June. To arrive at this conclusion, the analyst said the preview took into account several parameters, including time, number of active Bitcoin addresses, and hash rate.
The analyst added that there is reason to be skeptical of the uptrend via this pattern, dampening the enthusiasm of optimistic holders expecting the bulls to continue moving forward. At the time of writing, Bitcoin is back in a multi-week range that has capped all-time highs and found support at $56,800 in May.
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It is clear from the price fluctuations that buyers are dominating, at least that is what the top-down preview suggests. Despite the lows, especially in May when prices crossed $60,000, the bulls have a chance from the top-down preview.
Notably, prices are inside a bullish flag following the gains in Q1 2024. However, the failure of buyers to confirm the gains in mid-March is slowing the uptrend.
Buyers have failed to overcome $74,000 from the daily chart, and $72,000 is a strong liquidation line. In the short term, the trend could change if prices break decisively above $66,000, preferably on the back of rising trading volumes.
Germany Selling BTC as Profits Rise Against M1 Money Supply in the United States
The recent dump by the German government has further increased the concern. On July 1, he transferred 1,500 BTC, worth more than $94 million. LookOnChain data The data shows that 400 BTC were sent to three exchanges, including Bitstamp.
While it is not immediately clear whether they sold or not, sending them to an exchange means they are willing to sell them – a net bearish move. The address linked to the German government currently holds more than 44,000 BTC, worth more than $2.5 billion at spot rates.
Despite these concerns, others are bullish on BTC. Citing the relationship between the United States M1 money supply and BTC prices, one analyst said the coin is set for major gains.
Looking at the charts, analysts logic Bitcoin has not reached a new all-time high relative to the United States’ M1 money supply in over six years.
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However, given the consistent surge in BTC prices since mid-2023, it is very likely that the bulls will take over, pushing the token to new all-time highs.
Feature image from DALLE, chart from TradingView
