According to market analysis company Swissblock, Bitcoin's recent surge to $120,000 has failed and now resembles a "failed breakout zone". The company's analysis suggests that the actual profit flow and large amount of coins in profit have turned every price increase into an opportunity for supply to meet the price.
Key Factors Behind the Decline
- Profit-Taking Activity: Swissblock views the decline as a pause rather than a collapse, with profit-taking activity increasing but not as sharply as at the end of 2024. The impact until the end of July is sufficient to curb the rally and trigger consolidation.
- Selling Pressure: Selling pressure is evident but not excessive, with the tone cooling down rather than capitulating. Buy orders are absorbing supply rather than being overwhelmed by it.
- Profit Range: A staggering 96% of the supply is in profit, which historically corresponds to end-of-cycle euphoria. However, this also self-limits, as nearly all holders are in profit, increasing latent selling pressure.
What's Next for Bitcoin?
Swissblock believes the overall trend remains intact, but momentum needs to be reset. The company's aggregated fundamental factors show a neutral stance with improving liquidity. The Bitcoin Fundamental Index is 60 (neutral), with network growth cooling off and liquidity recovering. This combination typically favors range-bound behavior rather than directional price surges.
Outlook and Predictions
- Breakout Potential: Swissblock's final assessment leans cautiously positive, with profit-taking gradually decreasing and selling pressure being absorbed. The company expects a strong price rally once momentum adjusts.
- Altcoin Season: The altcoin season is lively but under pressure, with most altcoins weakening. Only 5% of the top 100 altcoins show positive growth momentum.
- Future Price Movement: If Bitcoin brings momentum back to positive levels, the ripple effect could be powerful, with ETH and other altcoins likely to explode in price when that happens
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