The price of bitcoin is on the rise on the spot market, surpassing $63,000 on June 30 before pulling back. Although momentum is building, the currency's price performance is a matter of debate. Still, some have doubts and believe there are reasons for a possible overvaluation.
Analyst: bitcoin is overvalued, here's why
In a post on x, an analyst x.com/Giovann35084111/status/1807630982910267535″ target=”_blank” rel=”nofollow”>argues that the coin is likely to cool off, extending the 18% drop recorded in June. To conclude, the analyst said that the preview took into account several parameters, including time, the number of active bitcoin addresses, and the hash rate.
Through this model, the analyst said there was reason to doubt the uptrend, which discouraged optimists who expected the bulls to continue ahead. At the time of writing, bitcoin is back in the multi-week range with caps at all-time highs and support at $56,800 recorded in May.
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From the price action, it is clear that buyers are in charge, at least from a downside perspective. Despite the lower lows, especially in May when prices broke above $60,000, bulls have an opportunity from a downside perspective.
It is worth noting that prices are within a bullish flag after Q1 2024 earnings. However, the fact that buyers have not confirmed earnings by mid-March is slowing down the uptrend.
Buyers have failed to break above $74,000 on the daily chart, and $72,000 is a solid liquidation line. In the short term, the trend could change if prices decisively break above $66,000, preferably thanks to an increase in trading volume.
Germany sells as btc gains against US M1 money supply
Another factor fueling concerns is the recent crypto crash by the German government. On July 1, they transferred 1,500 btc, worth over $94 million. Lookonchain x.com/lookonchain/status/1807698120752627855″ rel=”nofollow”>data shows that 400 btc was sent to three exchanges, including Bitstamp.
While it’s not immediately clear whether they sold them, sending them to an exchange means they’re interested in getting rid of them, which is a net sign of pessimism. The address associated with the German government currently holds over 44,000 btc worth over $2.5 billion at spot exchange rates.
Even amid these concerns, others are bullish on btc. Citing the relationship between the US M1 money supply and btc prices, one analyst said the coin is poised for significant gains.
Looking at the chart, the analyst x.com/CryptoJelleNL/status/1807704333053550797″ target=”_blank” rel=”nofollow”>argues that bitcoin has not reached a new all-time high relative to the US M1 money supply in over six years.
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However, considering the steady rise in btc prices since mid-2023, it is highly likely that bulls will take control and push the coin to new all-time highs.
Featured image by DALLE, chart by TradingView
