Bitcoin has been trending higher in spot rates, surpassing $63,000 on June 30 before pulling back. While momentum is building, the coin’s price action is a source of debate. Still, some are skeptical, thinking there is reason for a possible overvaluation.
Analyst: Bitcoin is overvalued, here’s why
In a post on X, an analyst argues that the coin could likely cool off, extending the 18% drop recorded in June. To conclude this, the analyst said that the visualization took into account several parameters, including time, number of active Bitcoin addresses and hash rate.
Through this model, the analyst said there is reason to doubt the uptrend, dampening the spirits of bullish holders who expect the bulls to continue. At the time of writing, Bitcoin is back in a multi-week range, with 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 command, at least on a top-down view. Despite lower lows, especially in May when prices broke above $60,000, bulls have a chance on a top-down view.
Notably, prices are within a bullish flag following gains in Q1 2024. However, the failure of buyers to confirm gains in mid-March is slowing the uptrend.
Buyers failed to break above $74,000 on the daily chart, and $72,000 is a strong sell-off line. In the short term, the trend could change if prices break decisively above $66,000, preferably on increased trading volume.
Germany Selling as BTC Gains vs. US M1 Money Supply
Another source of concern is the recent dump by the German government. On July 1, they transferred 1,500 BTC, worth over $94 million. Lookonchain data shows that 400 BTC were sent to three exchanges, including Bitstamp.
While it’s not immediately clear whether they were sold, sending them to the exchange means they are interested in offloading them — a bearish sign. The address associated with the German government currently holds more than 44,000 BTC worth over $2.5 billion at spot rates.
Even amid these concerns, others are bullish on BTC. Citing the relationship between the U.S. M1 money supply and BTC prices, one analyst said the coin is poised for major gains.
![Bitcoin Analyst Says Coin Is Overvalued: Why Is This BTC Chart Super Bullish? 2 BTC vs. US M1 Money Supply Chart | Source: @CryptoJelleNL via X](https://thegurumedia.com/wp-content/uploads/2024/07/GRZBgmOXIAA5Cts.jpg)
Looking at the chart, the analyst argues that Bitcoin has not reached a new all-time high relative to the United States 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 the bulls will take control, pushing the coin to new all-time highs.
Featured image by DALLE, chart by TradingView