Bitcoin [BTC] has been experiencing a gradual decline since the start of June, displaying lower highs and lower lows on the weekly chart. Nonetheless, CryptoQuant’s Founder and CEO, Ki Young Ju, remains optimistic, asserting that Bitcoin is in the middle of its current cycle.
In a recent analysis, Ju pointed out that the BTC Coinbase spot volume dominance has reverted to levels seen in early 2024, a period preceding the approval of spot ETFs. This development was not viewed as favorable, indicating the necessity for an increase in U.S. investors to propel Bitcoin to new highs.
Using on-chain metrics, CryptoQuant delved deeper to determine whether the cycle is at its midway point or not, yielding encouraging results.
Positive Long-Term Implications of profit-taking behavior
Examining the UTXO age bands revealed the distribution percentage of realized cap among various UTXO age brackets. The chart demonstrates the ratio of realized cap of spent UTXOs that were transacted.
During different phases of the cycle, the 3-month to 2-year UTXO age groups exhibit distinct peaks and troughs. Approaching the market peak, these age categories witness a significant drop, forming bottoms around the same time as the market peak. As the downtrend ensues, these bands surge, indicating increased participation of holders re-entering the Bitcoin market as buyers.
Additionally, a milder peak and trough pattern lasting several months can be observed between cycle peaks. Even though this doesn’t symbolize the cycle peak, it signifies that holders perceived it as such, evident during October 2013, October 2016, and April 2020.
The proximity of the previous two peaks to BTC halving events suggests a subsequent accumulation wave surrounding the halving, followed by distribution post-bull run.
Thus, a possible similar peak post the April 2024 halving could imply that the cycle peak is approximately a year away.
Analysis of Puell Multiple and BTC market timing
The Puell multiple can identify market peaks and increased selling pressure from miners. Similar to the UTXO bands, it also shows peaks between cycles, indicating miners cashing out profits before halving to sustain their operations.
The most recent peak was noted in March 2024, aligning with the notion that Bitcoin is midway through its current cycle.