Exposing the reasons why Bitcoin’s “stagnation period” must end

Price corrections are a healthy aspect of a bull market as it allows an asset to regain lost momentum. Bitcoin has also been experiencing a similar period over the past few days as prices stabilized below $40,000. While this was the case with BTC, several altcoins took advantage of the lagging rally and saw high price swings during the week.

While altcoins often perform during periods of Bitcoin stagnation, these situations are always temporary. In the case of Bitcoin, let’s see how long this stagnation might last.

Bullish on altcoins this week

Starting with Ethereum, the world's largest altcoin hit a monthly high of $2,774, a price last seen on June 7. The momentum behind Ethereum's rise this time came in part from its hard fork event. More importantly, retail demand for Ethereum has also increased over the past week.

Chainlink has been able to show a V-shaped recovery on the chart, rallying to $25 on August 4 before consolidating at $23. However, Chainlink also has a low correlation with Bitcoin. Therefore, over time, the two assets have performed differently at different times.

(Image source: Intotheblock)

Speaking of uncorrelated assets, Uniswap has also made some achievements, as the open finance asset has risen above $20 at press time. As of August 6, a double bottom pattern is forming, which also means that the market may see a breakout.

Today, these assets have been performing well while Bitcoin is in mild distress. So how long will it take for Bitcoin to recover?

How long might Bitcoin’s stagnation period last?

The answer is, not for long.

(Image source: Trading View)

At press time, Bitcoin has been in a “stagnation” phase since July 31. In short, it is “resting.” On August 1, the asset temporarily surpassed $42,000. However, the price was corrected almost instantly. 24 hours ago, Bitcoin managed to break out of the falling mode. However, as of August 6, part of the price it had recovered in the past 12 hours has fallen back to where it was.

Now, the main concern here is that there may be an upper limit to the standstill period.

(Image source: Intotheblock)

According to IntoTheBlock, the number of addresses holding Bitcoin at $37,100 is as high as 820,000, holding a total of about 398,000 BTC. Therefore, it can be inferred that the decline in valuation and closing below $37,100 will no longer be considered a stagnation period. Bitcoin falling below $37,000 may open the door to a bear market. Subsequently, altcoins will also lose their higher market points.

Therefore, if there was ever an opportune moment to break out of the stagnation period, for Bitcoin, it is now. Otherwise, the story will continue to swing back and forth between the bulls and the bears.