Janice R. Andrews
The price of bitcoin has significantly decreased, falling by 1.35% during the past day. Currently, the cryptocurrency is 16% behind its March 14 all-time high of $73,835. Given that Bitcoin has dropped 9.2% in the last 30 days, market observers are wondering if the cryptocurrency has achieved its “cycle top.”
The founder of Capriole Investments, Charles Edwards, has drawn attention to a number of on-chain measures that show that Bitcoin has failed to reach new highs following two retests, which he views as a “sign of weakness.” The Bitcoin long-term holder (LTH) inflation rate, which has been gradually increasing over the last two years, is one of the crucial measures that Edwards mentioned.
The annualized accumulation or distribution rates of Bitcoin holders in relation to the daily issuance to miners are measured by the LTH inflation rate, according to Glassnode. Market inflation usually surpasses the nominal 2.0 barrier at bull market tops, indicating a strong probability of the cycle top. The LTH inflation rate is currently 1.9, which is just below this crucial point.
The growth in the Bitcoin Dormancy Flow is another important statistic. This on-chain measure calculates how many coins are being spent in comparison to the general trend. The Bitcoin Dormancy Z-score has increased dramatically during the past ninety days, according to Glassnode data. According to Edwards, this measure peaked in April 2024, suggesting that the average age of spent coins has gone up. Dormancy Z-score maxima have historically occurred around three months ahead of cycle tops.
Rising Spent Volume clusters and spikes were also mentioned by Edwards as possible indicators of a market top. He emphasized that historically, a sharp increase in Bitcoin’s 7–10 year Spent Volume has signaled the end of a cycle. The notable surge in on-chain Bitcoin movement in 2024 is partly ascribed by Edwards to the closing cryptocurrency exchange Mt. Gox, which is getting ready to pay back its creditors with more than $9 billion in Bitcoin.
These measurements taken together present an unsettling picture for Bitcoin’s immediate future. The potential cycle top of Bitcoin is indicated by the increasing rate of LTH inflation, the peak observed in the Dormancy Z-score, and the abrupt increases in Spent Volume. The upcoming weeks will be critical in determining if Bitcoin can regain its momentum or if it will continue its downward trajectory, as market participants closely watch these developments.
