On-Chain Metrics Suggest Bitcoin Is About To Drop To $7,000
Bitcoin has been trading tightly within a range between $9.3k and $9.5k over the previous few days, making it part of the cryptocurrency asset’s consolidation in the past two months which restricted the price action below the critical $10k barrier.
Bitcoin market has been dull, such that it is about to attain a level of volatility not recorded since the beginning of 2020. Nonetheless, there is emerging proof that a breakout towards the downside is on the way.
Bitcoin’s on-chain stats are allegedly terrible despite the prices holding up fine. Several statistics for Bitcoin are all trending low and could lead to price levels around $7k, says the founder of BlockTree, Charlie Morris, on June 14:
“#bitcoin on chain stats are dire. 1-week network velocity down to 454%, 5-wk 556%. Tx value down, av tx size down, fees down, MRI shot to pieces. Why the lack of interest? Can’t see price holding up. Fair value <$7k.”
He predicted a decline towards $7k based on ByteTree’s Fair Value indicator. According to the company, the Fair Value indicator “describes a network value multiple with respect to on-chain transaction volume (the economic value of transactions in USD terms).”
Data from IntoTheBlock also corroborates the bearish on-chain outlook. It shows 3 bearish metrics: net network growth, which monitors Bitcoin network general trend; in the money, a measure which monitors the profitability of Bitcoin investors; and large transactions, the raw count of the number of “large” Bitcoin transactions carried out.
The mining domain has an on-chain silver lining. Based on data from Coin Metrics on June 14, Bitcoin’s hash rate increased after the fall recorded following the block reward halving on May 11. However, this may not be sufficient to halt the confluence of a bearish on-chain and technical outlook for Bitcoin.