Bitcoin is currently facing a potential correction before it can retest its record high later this year. The CryptoQuant Bitcoin Profit and Loss Index is showing that the cryptocurrency is hovering around its 365-day moving average, a key threshold for determining market trends. Historically, a downward crossover of this index has signaled major corrections, similar to what happened in 2021.
Traders’ margins have also turned extremely negative, which could indicate a possible bottoming out. According to Julio Moreno, head of research at CryptoQuant, Bitcoin is at a critical level where it could either form a local bottom or experience a significant correction like the one seen in the summer of 2021. The current price of Bitcoin is testing key support at $57,000 for the third day in a row after dropping below that level last week.
Despite the recent price slump, demand for Bitcoin has been on the rise since May, as evidenced by the increasing number of whales holding the cryptocurrency. However, the lack of acceleration in stablecoin liquidity and the continued selling of Bitcoin by mid and large-sized miners could hinder a significant price rally. It is important to monitor these factors in order to gauge the potential for Bitcoin to reach new highs.