Bitcoin, the predominant cryptocurrency by market capitalization, has recently undergone a noteworthy price correction. This unexpected downturn has ignited discussions among investors, leaving many questioning whether this signifies the end of the current bull cycle or if it’s merely a temporary setback. While short-term holders are facing potential losses, a deeper analysis of long-term metrics offers a broader perspective on Bitcoin’s trajectory. This analysis, presented by CryptoQuant’s Avocado Onchain, delves into these insights.
Is the Current Dip an Opportunity or the End of the Bull Cycle?
In the analysis conducted by Avocado Onchain, a crucial aspect examined is the realized price for investors who entered the market at Bitcoin’s recent peak of $98,000. These investors find themselves in a loss-making position. However, those who invested one to three months ago have a realized price significantly lower at $71,000, providing a buffer against the current correction.
Avocado Onchain highlights that historical patterns from Bitcoin’s 2021 bull cycle showcase similar fluctuations between record highs and sharp corrections. This pattern suggests that these dips may not necessarily indicate the end of the cycle but rather serve as opportunities for market rebalancing and potential growth. A key indicator examined is the 30-day moving average of the short-term SOPR (Spent Output Profit Ratio). This metric tracks whether recent market participants are selling at a profit or a loss. The current SOPR data indicates that recent short-term inflows into Bitcoin have not resulted in substantial profit-taking. Unlike previous cycle peaks characterized by aggressive selling, the ongoing correction appears more subdued, suggesting that the market may still have room for upward movement.
Bitcoin’s Short-Term Dips Versus Long-Term Trends
Furthermore, Avocado Onchain emphasizes the importance of distinguishing between short-term corrections and broader cycle trends. Bitcoin’s historical tendency to rebound after corrections in past bull cycles reinforces the belief that the current downturn may not mark the cycle’s end. These insights align with the behavior of long-term holders, who often leverage corrections to consolidate their positions, thereby bolstering market resilience.
Avocado’s analysis concludes with a statement encouraging prospective investors to consider the current market scenario as a potential opportunity. For those who have yet to enter the market, buying Bitcoin at a discounted rate might be advantageous. Rather than succumbing to panic selling during short-term downturns, adopting a long-term perspective and implementing a dollar-cost averaging (DCA) strategy could prove more effective.
At the time of writing, Bitcoin is witnessing a gradual rebound, with its price increasing by 1.3% in the past hour. Nevertheless, the asset remains under the influence of bearish trends, down by 3.5% over the past day and 10.5% from its peak of $108,135 recorded last week.
