Bitcoin’s price trajectory continues to show a downward trend, prompting analysts to speculate on whether the cryptocurrency will soon break out of its bearish phase.
In the past 24 hours, Bitcoin [BTC] has demonstrated notable gains, climbing from a recent low of $55554 to $58038 at the current moment. This surge represents a 2.08% increase over the previous day.
These recent gains coincide with a 1.83% weekly increase, marking a recovery from a sharp drop to $52546.
The current market conditions have raised concerns regarding whether BTC will witness a sustained recovery or merely a temporary correction before another downturn. Analysts maintain a bearish sentiment, anticipating a potential dip in the market.
According to CryptoQuant analysts, the prevailing market data indicates that BTC remains entrenched in a bear phase, as evidenced by the 365-day moving average and MVRV.
Bitcoin’s Continued Struggle in the Bear Phase
Observations from CryptoQuant suggest that the Bull-Bear Market cycle has persisted in the bear phase for the past two weeks.
Since BTC’s last trading peak at $62k, the cryptocurrency has lingered in a bearish cycle, dropping to a low of $52k during this timeframe.
As long as it remains within this phase, the likelihood of a substantial rally seems unlikely, with the potential for further corrections looming large.
Moreover, the analysis highlights that BTC’s MVRV ratio has consistently remained below the 365-day moving average since August 26th. This scenario indicates a probable decline, akin to what transpired in May 2021.
During the 2021 cycle, Bitcoin witnessed a 36% decline over two months, a pattern that recurred in November 2021.
Another bearish signal in the market is reflected in the Long-Term Holders’ SOPR, which has shown a decline since July. According to CryptoQuant, long-term holders are now selling their holdings at reduced profit margins.
When long-term holders opt for lower profit margins, it signifies a lack of fresh demand for BTC. A positive buying signal for Bitcoin will only emerge once the Long-Term Holders’ SOPR charts depict an upward trend.
Furthermore, Bitcoin has severed its correlation with gold, with BTC prices decreasing while gold prices soar to new heights. This reversal in correlation suggests that investors are turning risk-averse, seeking refuge in traditional safe-haven assets and avoiding volatile options.
Interpreting Bitcoin’s Chart Trends
Looking ahead, both Bitcoin’s Long-Term Holder SOPR and Short-Term Holder SOPR have experienced declines over the past week. A decrease in the Long-Term Holder SOPR implies that long-term investors are increasingly offloading their holdings at a loss.
Similarly, a drop in the Short-Term Holder SOPR indicates that short-term investors are also selling off their positions at a loss, influenced by fear, uncertainty, and a pessimistic outlook regarding future price movements.
Moreover, Bitcoin’s Net Unrealized Profit/Loss (NRPL) has transitioned from positive to negative, signaling a phase of investor capitulation. This shift indicates waning investor confidence in Bitcoin’s trajectory, leading them to sell their holdings despite incurring losses.
Consequently, based on these analytical insights, Bitcoin’s bearish phase is anticipated to persist, with further price corrections on the horizon. If bearish sentiment prevails, Bitcoin’s price is likely to decline towards the $56k support level.