Bitcoin, the leading cryptocurrency, has been on an upward trend recently, surpassing $63,000 before witnessing a slight pullback. However, there are concerns among analysts about the possibility of the coin being overvalued.
One analyst contends that Bitcoin may cool off and experience a further drop, following an 18% decline recorded in June. This assessment took into account various factors, including time, the number of active Bitcoin addresses, and hash rate. Based on these parameters, the analyst suggests that the current uptrend may be in doubt, which may disappoint bullish investors. Presently, Bitcoin is trading within a multi-week range, reaching all-time highs but finding support at around $56,800, which was seen in May.
Despite some lower lows, especially when prices dipped below $60,000 in May, buyers still maintain control of the market. The analyst notes that prices are within a bull flag pattern, which typically indicates a continuation of the upward trend. However, the failure to confirm gains in mid-March has slowed down the rally. Breaking decisively above $66,000, accompanied by rising trading volume, could potentially signal a shift in the short-term trend.
Adding to the concerns regarding Bitcoin’s valuation, the German government recently transferred 1,500 BTC (worth over $94 million) to various exchanges. Although it is unclear whether they sold the coins, the act of sending them to exchanges suggests a willingness to offload them, which is generally seen as a bearish signal. The German government’s address currently holds a significant amount of BTC, valued at more than $2.5 billion.
Despite these concerns, other analysts remain bullish on Bitcoin. One analyst points to the relationship between the United States M1 money supply and BTC prices. They argue that Bitcoin has not reached a new all-time high relative to the M1 money supply in over six years. However, considering the consistent surge in BTC prices since mid-2023, the analyst believes that bullish momentum will prevail, eventually driving the price to fresh all-time highs.
In summary, there is a debate among analysts regarding the valuation and future prospects of Bitcoin. While some argue that the coin may be overvalued and due for a pullback, others see potential for major gains based on historical trends and the relationship with the US M1 money supply. Ultimately, the cryptocurrency market remains dynamic and subject to various factors influencing its price movements.