Bitcoin price sits at a crucial level with unclear direction and on-chain activity at a 6-year low.
The percentage of active Bitcoin addresses dropped to 1.22%, the lowest since 2018.
One possible reason for the decline is "altcoin dispersion," with a surge of new memecoins, particularly diluting the market.
Bitcoin might test support levels at $59,884 and $52,948, which might be prime buying opportunities.
The upcoming Ethereum ETF launches might bring a wave of volatility to Bitcoin.
Bitcoin currently sits at one of the most crucial price levels, according to CoinMarketCap.
At the time of writing, the flagship cryptocurrency is at around $60,500, and there is no clear indication of whether we are set to see a recovery or a dip.
To add more fuel to the fire, Bitcoin's on-chain activity has been observed to now be at its lowest point in more than six years (or since November 2018).
This adds further FUD to the mix and, if things continue like this, will cause more panic selling.
Why is Bitcoin declining in price and on-chain metrics, and what effects might these have on price?
According to data from IntoTheBlock, the percentage of active Bitcoin addresses dropped to just 1.22% in June from a peak of 1.32%.
The chart below also shows that this percentage has always been higher than in 2018.
Bitcoin’s daily active addresses
Moreover, we also have a marked decrease in the overall quantity of active wallets, with June 10 seeing a low of around 658,000 active addresses.
But why is the Bitcoin on-chain landscape this way?
One possible theory is that of oversaturation. According to Miles Deutscher in a recent Twitter thread, one reason that the altcoins (and Bitcoin) are performing so terribly in this cycle is what he calls an "altcoin dispersion."
According to Deutscher, this trend has been brought on by a steady rise in the number of available altcoins on the market, most of which are memecoins.
“Altcoin dispersion is killing crypto,” Deutscher says, in that over 1 million new crypto tokens were launched between April and June alone this year, making it significantly harder for Bitcoin and the other altcoins to get inflows of fresh liquidity.
Bitcoin's price movement, as of late, shows that reaching a significant bottom may be close.
According to recent insights from trading expert Alan Santana in a recent TradingView post, Bitcoin might soon be ready to test several key support levels.
As of June 29, Bitcoin is hovering around $60,900.33, which is near the 0.618 Fibonacci retracement level.
The outlook on Bitcoin
Santana says that if this price level doesn't hold, the next significant support is around $59,883.97, the 0.786 Fibonacci retracement level.
If the decline continues, the price might revisit the 1.236 Fibonacci extension level at $52,948.21, an even more massive buying opportunity for traders.
Interestingly, Santana does not say whether Bitcoin will rebound on any of these timeframes.
However, he does mention that if we see any signs of stabilization around these levels, it might signal a prime buying opportunity.
Overall, the incoming launch of the spot Ethereum ETFs, possibly in the first week of July, is set to introduce a great deal of volatility on Bitcoin and the rest of the market, and it might help to stay sharp in case of any flash rallies or dips.
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