BTC regains $63,000, Coinbase Premium Index suggests "darkest moment before dawn"

The crypto market started the second half of the year on Monday in a rising trend.

The latest data on U.S. manufacturing activity showed that the U.S. manufacturing PMI fell further into contraction territory in June, hitting a four-month low, boosting investors' hopes that the Federal Reserve may cut interest rates in September as the economy appears to be showing signs of weakness. Investors are still awaiting the June employment report due on Friday, which would provide more support for a rate cut if it shows signs of further cooling in the labor market.

According to Bitpush data, Bitcoin (BTC) rebounded above the $62,800 support level in the early trading and hit a daily high of $63,820 after midday. As of press time, Bitcoin was trading at $63,263, up 2% in the past 24 hours.

Most of the top 200 altcoins by market cap followed Bitcoin higher.

LayerZero (LZO) had the biggest gain, up 15.1% and trading at $3.83, followed by Bonk (BONK) up 14.1% and Ethereum Name Service ( ENS ) up 11.7%. Arkham (ARKM) had the biggest loss, down 8.7%, Convex Finance (CVX) down 7.1% and io.net (IO) down 4.4%.

The current overall market value of cryptocurrencies is $2.32 trillion, and Bitcoin’s market share is 53.5%.

As for U.S. stocks, as of the close of the day, the S&P index, Dow Jones index and Nasdaq index all closed higher, up 0.27%, 0.13% and 0.83% respectively.

Bitcoin price may be near or have already bottomed

CryptoQuant data shows that Bitcoin's premium index on Coinbase has fallen to its lowest level since the FTX crash. Similar values ​​in November 2022 and August 2023 were accompanied by prices about to bottom and then rebound.

David Lawant, head of research at institutional cryptocurrency trading platform FalconX, wrote on the X platform: "The darkness before dawn is always darkest. The last time the Coinbase premium was so low was a few months before the massive rally from October 2023 to March 2024."

The indicator remained negative for much of June and May, mirroring the market downturn of August and September last year, according to data from analytics firm CryptoQuant. On Friday, the indicator fell to nearly -0.19, the lowest value since the collapse of crypto exchange FTX in November 2022.

The negative values ​​in early November 2022 coincided with BTC’s bear market low below $16,000, before prices surged to nearly $25,000 in February. That’s an increase of more than 50%.

The August 2023 premium nadir occurred a few weeks before Bitcoin hit a local bottom around $25,000. BTC has since been range-bound, with prices doubling before hitting a record high from October to January, driven by expectations for a U.S. Bitcoin ETF.

Lawant said: "At least recently, the Coinbase premium has become a reliable, confirmatory and even forward-looking indicator of overall market trends, which highlights the important influence of the US market in determining market price formation. There are signs that the next 6 to 12 months will be exciting, but also potentially turbulent ."

Given that several upcoming catalysts are centered around the U.S. market — such as ETF flows, U.S. monetary policy and the presidential election — he said he expects the trend to continue.

Tailwinds and headwinds

Despite the rebound, Bitfinex analysts noted that Bitcoin failed to maintain the positive tone at the beginning of the year, and in recent weeks, specific factors have further brought resistance to the digital asset price, ending the first half of the year in a sluggish state.

BTC also decoupled from the U.S. stock market in June as long-term holders resumed selling while excess supply took its toll on the market.

"The policy environment has led to a drop in volatility, which has affected Bitcoin prices," the analysts said. "BTC has struggled to maintain its upward momentum, decoupling from the U.S. stock market, while long-term Bitcoin holders who paused selling in early May have returned. While reduced selling by mining companies suggests some stabilization in the market, continued cashing out by long-term holders means the near-term outlook is fragile."

"At the same time, excess supply continues to weigh on the market, with potential selling pressure from Mt. Gox depositors and the German Federal Criminal Police Agency, the Bundeskriminalamt, likely to sell bitcoin," the analysts noted.

As for tailwinds, Bitfinex highlighted that “the Federal Reserve’s preferred inflation measure, the personal consumption expenditures index, remained unchanged in May, suggesting that inflation is now just above the Fed’s 2% target.”

"Hopes are that this may prompt a rate cut in September, and the case for such action is supported by the third estimate of US first quarter GDP which showed that the economy remains on weak fundamentals despite a small upward revision," they said. "Furthermore, consumer confidence is declining and the share of consumers planning to buy a home is low due to high mortgage rates and limited supply, raising hopes that a rate cut will come sooner rather than later."

Returning to the direct impact on Bitcoin’s price, Bitfinex analysts said that while “profits are expected in a bull market, the scale of recent selling by long-term holders” raises “concerns.”

“If long-term holders continue to take profits at current levels, which we believe is unlikely over the longer term, this could put downward pressure on Bitcoin prices in the near term, potentially extending the current decline and impacting the bull case in the medium term,” they warned.

Although many analysts have described Bitcoin’s sideways price action over the past four months as “boring,” Ki Young Ju, founder and CEO of crypto analytics firm CryptoQuant, said on the X platform that periods of less volatility are when whales accumulate the most, and Bitcoin is still in a bull cycle.