The past few days have seen Bitcoin stagnate into a tight range between $9,300 and $9,500. This is part of a wider two-month consolidation that has seen BTC’s price action tighten under the crucial $10,000 resistance.
The cryptocurrency market has been so “boring” that as NewsBTC reported previously, volatility is heading towards lows not seen since the start of the year.
There is evidence, however, starting to show that a breakout is imminent. And the evidence suggests that it will be a breakout in the downward direction.
Bitcoin On-Chain Metrics Are “Dire” — And That’s Not Good for BTC’s Price
Prices may be holding up rather well, but Bitcoin’s on-chain stats are purportedly “dire.” The founder of blockchain data firm BlockTree Charlie Morris reported on June 14th that a number of statistics for the leading cryptocurrency are all trending lower, suggesting a price drop to the $7,000s:
“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,” Morris wrote.
#bitcoin on chain stats are dire. 1 week network velocity down to 454%, 5wk 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. https://t.co/5O82LldYl6
— Charlie Morris (@AtlasPulse) June 14, 2020
His prediction of a drop towards $7,000 was derived from ByteTree’s Fair Value indicator. The firm says the Fair Value indicator “describes a network value multiple with respect to on-chain transaction volume (the economic value of transactions in USD terms).”
The bearish on-chain outlook can be corroborated by similar metrics from IntoTheBlock, another blockchain analytics firm.
Below is a screenshot of the company’s Bitcoin on-chain metrics dashboard. As can be seen, three out of the company’s seven core metrics are currently “bearish.”
The metrics “bearish” are as follows: 1) net network growth, which tracks the overall trend of the Bitcoin network; 2) in the money, a measure that tracks the profitability of BTC investors; and 3) large transactions, the raw count of how many “large” BTC transactions take place.
Miners Hold Strong
There is one on-chain silver lining though: the mining scene.
Blockchain data firm Coin Metrics observed on June 14th, Bitcoin’s hash rate has recovered the losses it incurred after the block reward halving on May 11th:
“The CMBI Bitcoin Hash Rate Index demonstrates that hash rate has now largely recovered to its pre-halving levels.”
The strength amongst mining entities may not be enough to stop the confluence of a bearish on-chain and technical outlook for Bitcoin though.
As one commentator explained:
“I’ve been seeing more and more comments saying BTC going down to support is unlikely because that’d be too big a drop. That’s not how BTC works. Retraces are short and…