Analyst View: Analysis of the Causes of Bitcoin's Weakness at the End of July and the Stalling of Altcoin Season

August 5 - According to the views of CryptoQuant Arab Chain analysts, the decline in Bitcoin at the end of July was primarily caused by: a decrease in the liquidity stock ratio, significant fluctuations in ETF demand, and insufficient accumulation of smart addresses.

Specifically, the liquidity stock ratio (blue line in the image) has dropped sharply, causing the amount of Bitcoin that can be sold on exchanges to remain at the lowest level in history for 3-month trading volume. This liquidity shortage condition makes the market very vulnerable, where even small sales can trigger sharp fluctuations.

(Note: Liquidity stock ratio = amount that can be sold on exchanges / average trading volume over 30 days, below 6 months is considered to reach warning levels)

Secondly, the flow of ETF funds (purple line in the image) shows sharp fluctuation characteristics, with an unstable state of "large inflows and outflows." When ETF funds exit, the market lacks support from other institutional funds, leading to inadequate price support.

Thirdly, the accumulation of Bitcoin by smart addresses (pink area in the image) is too slow. Although some large holders continue to accumulate, the buying power is far from enough to offset the selling pressure in the market, and they have not succeeded in capturing key moments for centralized purchases.

Meanwhile, Matrixport analyst Markus Thielen stated that although the market continues to discuss the "altcoin bull season," there have only been two short rebound rounds, mostly concentrated on a few projects, and the overall market is less sustainable.

The analysis also adds that while the fourth quarter of 2024 may be active in certain phases, it has not succeeded in forming a wide spread. The rapid decline in interest rates indicates that bullish sentiment in the market has not effectively gathered, fundamental support is insufficient, and future upward momentum still needs to be monitored.

Overall, the Bitcoin market is currently pressured due to liquidity shortages, fluctuations in ETF demand, and weak accumulation, while the rebound of the altcoin market may be difficult to sustain. Bullish sentiment in the market has not effectively gathered, fundamental support is insufficient, and future upward momentum still needs to be observed.

In general, although there is hope in the market for an altcoin bull season, the overall market performance still requires more positive signals to confirm the trend$BTC upward.