Bitcoin may be in the later stages of a bear market, on-chain data suggests
Bitcoin’s (BTC) recent rise was met with euphoria and skepticism as prices surged 40% in the past month – despite ongoing contagion spread by the fall of centralized crypto players.
Bitcoin fell to as low as $15,700 in November as the crypto market dealt with the insolvency of crypto exchange FTX and bearish sentiment in global equity markets. Prices ranged mostly between $15,700 and $17,500 until the first week of January.
The cryptocurrency has surged since then, along with growth in ether (ETH), decentralized finance markets (DeFi) and the broader stock market. Before retreating, bitcoin hit five-month highs above $23,500 earlier this week as traders took profits.
However, some analysts say that while the overall market sentiment cannot be called bullish yet, the recent price and chain data suggest that bitcoin may be in the later stages of a bear market.
“While current bitcoin performance suggests the bottom is already in, we are not out of treacherous waters yet, as we have not seen a full year pass since the 2022 bear market rally,” analysts at crypto exchange Bitfinex said in a market note. this week.
“Early 2020, before the third bitcoin rally with eight green candles, was a time of massive volatility amid bearish macro conditions; this could be what we experience now in the first and second quarters of 2023,” the analysts added.
The note quoted Glassnode as suggesting that short-term holders (STH) of bitcoin are now selling at a profit, while long-term holders (LTH) continue to hold massive spot positions — a move that “looks increasingly bullish for bitcoin.”
However, the macro sentiment remains a cause for concern.
“Since the asset class is currently highly correlated to the US stock market, bearish macro developments could limit the asset (bitcoin) from repeating past results,” Bitfinex analysts said.
Meanwhile, selling pressure on bitcoin from miners, a key part of the Bitcoin ecosystem, hit a three-year low last week.
As reported by CoinDesk last week, chain flows show that the amount of bitcoin transferred from miner addresses to wallets owned by exchanges has fallen to multi-year lows.
Miners are entities that supply computing power to any blockchain network in return for “rewards” in the form of tokens. These rewards are continuously sold by miners to cover their operating costs – which are quite intensive. Some miners filed for bankruptcy protection last year – and liquidated stakes, adding to selling pressure in the market.
Declining miner sales imply weaker selling pressure from those responsible for creating coins and are generally seen as bullish.
