Bitcoin reached new all-time highs earlier this year but has since entered a period of choppy price action, raising concerns about the end of the bull cycle. In this article, we analyze key metrics and trends to determine if this is just a cooling-off period or if we have already hit the cycle peak.
Fundamentally Overvalued?
The MVRV Z-Score, which compares Bitcoin’s market cap to its realized cap, is a reliable tool for assessing market cycles. The recent downward trend in the MVRV Z-Score might suggest the end of Bitcoin’s upward momentum. However, historical analysis reveals that similar declines occurred in past bull cycles, leading to significant rallies and new all-time highs. Therefore, the current downtrend does not necessarily mean the end of the bull cycle.
The MVRV Momentum Indicator also suggests a potential bear cycle, but historical data shows that similar dips have not always led to prolonged bear markets.
Struggling Beneath Resistance?
The Short-Term Holder (STH) Realized Price indicates that many new investors are currently holding Bitcoin at a loss. However, previous bull cycles saw Bitcoin’s price dip below the STH Realized Price without ending the bull market, presenting buying opportunities for investors.
Investor Capitulation?
The Spent Output Profit Ratio (SOPR) suggests that Bitcoin holders are not selling at sustained losses, indicating no widespread panic among investors. Previous bull cycles have experienced brief periods of selling at a loss followed by significant price increases, supporting the view that the bull cycle is ongoing.
Diminishing Returns?
Bitcoin has outperformed previous cycles in percentage gains, leading to speculations of a cooling-off period. However, historical data shows that such pauses do not mean the end of the bull market. Bitcoin has experienced similar pauses before continuing its upward trend.
The Hash Ribbons Buy Signal
The Hash Ribbons Buy Signal, indicating miner recovery after capitulation, suggests positive price action in the near future. This signal has historically preceded bullish price movements.
Conclusion
While there are signs of weakness in the Bitcoin market, metrics like the MVRV Z-Score, STH Realized Price, SOPR, and the Hash Ribbons Buy Signal suggest that the bull cycle is still intact. A more detailed discussion on this topic can be found in a recent YouTube video.
