Bitcoin recovers above $63,000, Coinbase premium index suggests "darkest moment before dawn"
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Bitcoin recovers above $63,000, Coinbase premium index suggests "darkest moment before dawn"
Bitcoin's price may have already bottomed out or is close to doing so.
Navigating Web3 tides with focused insightsBy Mary Liu, TechFlow
The crypto market started the second half of the year on an upward trend Monday.
Latest U.S. manufacturing activity data showed that the U.S. manufacturing PMI further slipped into contraction territory in June, hitting a four-month low. This has strengthened investor hopes that the Federal Reserve may cut interest rates in September as economic signs point to weakness. Investors are still awaiting the June employment report due Friday; if it shows further cooling in the labor market, it would provide additional support for rate cuts.
According to Bitpush News data, Bitcoin (BTC) rose above its 62,800 USD support level during early trading and hit a daily high of 63,820 USD in afternoon trading. At the time of writing, BTC was trading at 63,263 USD, up 2% over the past 24 hours.
Most altcoins within the top 200 by market cap followed Bitcoin’s upward movement.
LayerZero (LZO) led gains with a 15.1% rise, trading at 3.83 USD, followed by Bonk (BONK) up 14.1%, and Ethereum Name Service (ENS) up 11.7%. Arkham (ARKM) saw the largest drop, falling 8.7%, while Convex Finance (CVX) declined 7.1%, and io.net (IO) dropped 4.4%.
The total cryptocurrency market capitalization currently stands at 2.32 trillion USD, with Bitcoin holding a 53.5% market dominance.
In U.S. equities, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all closed higher on the day, rising 0.27%, 0.13%, and 0.83% respectively.
Bitcoin price may have already bottomed or is near a bottom
CryptoQuant data shows that Bitcoin's premium index on Coinbase has fallen to its lowest level since the FTX collapse. Similar readings in November 2022 and August 2023 were followed by price bottoms and subsequent rebounds.
David Lawant, head of research at institutional crypto trading platform FalconX, said on X: "The darkest hour is always before the dawn. The last time Coinbase premium was this low was several months before the broad rally from October 2023 to March 2024."
According to data from analytics firm CryptoQuant, the indicator remained negative throughout much of May and June, mirroring the market slump seen in August and September last year. On Friday, the index dipped to nearly -0.19, the lowest level since the FTX exchange collapsed in November 2022.
Negative values in early November 2022 coincided with Bitcoin’s bear market low below 16,000 USD, after which prices surged to nearly 25,000 USD by February — a gain of more than 50%.
The lowest premium in August 2023 occurred weeks before Bitcoin reached a local bottom around 25,000 USD. After that, BTC traded sideways until expectations around U.S. Bitcoin ETF approvals drove prices to double between October and January, eventually reaching new all-time highs.
"At least recently, the Coinbase premium has become a reliable, confirmatory, and even leading indicator of overall market trends, highlighting the significant influence of the U.S. market in shaping price formation," Lawant said. "Signs suggest the next 6 to 12 months could be exciting, but potentially volatile."
Given upcoming catalysts centered on the U.S. market—such as ETF flows, U.S. monetary policy, and the presidential election—he expects this trend to continue.
Tailwinds and headwinds
Despite the recent rebound, Bitfinex analysts noted that Bitcoin failed to maintain its positive momentum from the start of the year. In recent weeks, specific factors have added resistance to digital asset prices, resulting in a lackluster end to the first half.
BTC decoupled from U.S. equities in June due to resumption of selling by long-term holders and oversupply impacting the market.
"The policy environment has led to reduced volatility, affecting Bitcoin’s price. BTC has struggled to sustain upward momentum and has decoupled from U.S. stocks, while long-term Bitcoin holders who paused selling in early May have returned," analysts said. "Although reduced sell pressure from mining companies suggests some market stabilization, continued profit-taking by long-term holders indicates near-term fragility."
Meanwhile, analysts pointed out that "supply overhang continues to weigh on the market, with potential sell pressure from Mt. Gox creditors and Germany’s Federal Criminal Police Office (Bundeskriminalamt)."
On the supportive side, Bitfinex emphasized that "the Fed’s preferred inflation gauge—the Personal Consumption Expenditures (PCE) index—remained unchanged in May, indicating inflation is currently only slightly above the Fed’s 2% target."
"This raises hopes for a September rate cut. The third estimate of U.S. Q1 GDP supports such action, showing that despite a slight upward revision, the economic foundation remains weak. Additionally, consumer confidence is declining due to high mortgage rates and limited housing supply, with fewer consumers planning to buy homes, increasing hopes for prompt rate cuts," they said.
Regarding direct impacts on Bitcoin’s price, Bitfinex analysts noted that while "profit-taking is expected during bull markets, the recent scale of long-term holder sell-offs" has raised "concerns."
They warned: "If long-term holders continue to take profits at current levels—which we believe unlikely over the longer term—it could exert downward pressure on Bitcoin’s price in the short term, possibly extending the current downtrend and affecting the bull market in the medium term."
While many analysts have described Bitcoin’s flat price action over the past four months as “boring,” Ki Young Ju, founder and CEO of crypto analytics firm CryptoQuant, said on X that periods of low market volatility are when whales accumulate the most, and that Bitcoin remains in a bull market cycle.
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