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Is the Bitcoin Bull Cycle Over?

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4 weeks ago

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After reaching new all-time highs earlier this year, Bitcoin has entered a multi-month period of choppy price action, leading many to wonder if the bull cycle is over. In this article, we dive deep into key metrics and trends to understand if the market is just cooling off or if we’ve already seen the peak for this cycle.

Fundamentally Overvalued?

One of the most reliable tools for gauging Bitcoin’s market cycles is the MVRV Z-Score. This metric measures the difference between Bitcoin’s market cap and its realized cap, or cost-basis for all circulating BTC, helping investors determine whether Bitcoin is over or undervalued according to this ‘fundamental’ cost of BTC.

Recent data shows that the MVRV Z-Score has demonstrated a sustained downward movement, which might suggest that Bitcoin’s upward trajectory has ended. However, a historical analysis tells a different story. During previous bull cycles, including those in 2016-2017 and 2019-2020, similar declines in the MVRV Z-Score were observed. These drawdown periods were followed by significant rallies, leading to new all-time highs. Thus, while the current downtrend may seem concerning, it’s not necessarily indicative of the bull cycle being over.

Figure 1: MVRV Z-Score typically experiences a sustained retracement during bull cycles. Access Live Chart 🔍

The MVRV Momentum Indicator helps distinguish between bull and bear cycles by applying a moving average to the raw MVRV data. It recently dipped below its moving average and turned red, which may signal the start of a bear cycle. However, historical data shows that similar dips have occurred without leading to a prolonged bear market.

Figure 2: MVRV is beneath its yearly average, but similar blips have occurred before significantly higher prices. Access Live Chart 🔍

Struggling Beneath Resistance?

Another essential metric to consider is the Short-Term Holder (STH) Realized Price, which represents the average price at which recent market participants acquired their Bitcoin. Currently, the STH Realized Price is around $63,000, slightly above the current market price. This means that many new investors are holding Bitcoin at a loss.

However, during previous bull cycles, Bitcoin’s price dipped below the STH Realized Price multiple times without signaling the end of the bull market. These dips often presented opportunities for investors to accumulate Bitcoin at discounted prices before the next leg up.

Figure 3: STH cost-basis price presenting accumulation opportunities. Access Live Chart 🔍

Investor Capitulation?

The Spent Output Profit Ratio (SOPR) assesses whether Bitcoin holders are selling at a profit or a loss. When the SOPR is below 0, it suggests that more holders are selling at a loss, which can signal market capitulation. However, recent SOPR data shows only a few instances of selling at a loss, which have been brief. This implies that there is no widespread panic among Bitcoin holders, typically seen during a bear market’s early stages.

In the past, brief periods of selling at a loss during a bull cycle have been followed by significant price increases, as seen in the 2020-2021 run-up. Therefore, the lack of sustained losses and capitulation in the SOPR data supports the view that the bull cycle is still intact.

Figure 4: Low realized losses indicate investors are willing to wait for higher prices before selling. Access Live Chart 🔍

Diminishing Returns?

There’s a theory that each Bitcoin cycle has diminishing returns, with lower percentage gains than the previous cycle. If we compare the current cycle to previous ones, it’s clear that Bitcoin has already outperformed both the 2015-2018 and 2018-2022 cycles regarding percentage gains. This outperformance might suggest that Bitcoin has gotten ahead of itself, necessitating a cooling-off period.

However, it’s also important to remember that this cooling-off period doesn’t mean the end of the bull market. Historically, Bitcoin has experienced similar pauses before resuming its upward trajectory. Thus, while we might see more sideways or even downward price action in the short term, this doesn’t necessarily indicate that the bull market is over.

Figure 5: Bitcoin continues to outpace the previous two cycles. Access Live Chart 🔍

The Hash Ribbons Buy Signal

One of the most promising indicators for Bitcoin’s future price action is the Hash Ribbons Buy Signal. This signal occurs when the 30-day moving average of Bitcoin’s hash rate crosses above the 60-day moving average, indicating that miners are recovering after a period of capitulation. The Hash Ribbons Buy Signal has historically been a reliable indicator of bullish price action in the months that follow.

Recently, Bitcoin has shown this buy signal for the first time since the halving event earlier this year, suggesting that Bitcoin could see positive price action in the coming weeks and months.

Figure 6: A recent hash ribbons buy signal. Access Live Chart 🔍

Conclusion

In summary, while there are signs of weakness in the Bitcoin market, such as the dip in the MVRV Z-Score and the STH Realized Price, these metrics have shown similar behavior in previous bull cycles without signaling the end of the market. The lack of widespread capitulation, as indicated by the SOPR and the recent Hash Ribbons Buy Signal, provides further confidence that the bull cycle is still intact.

For a more in-depth look into this topic, check out a recent YouTube video here:



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Bitcoin Close Above This Will Trigger Rally to $70K, Will Fed Rate Cut Help?

Published

2 days ago

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September 18, 2024

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The Bitcoin price has staged a strong recovery gaining 4.5% in the last 24 hours surging past $60,500 a day before the FOMC meeting on Wednesday. As per the technical chart, BTC has been trading range-bound in a down-trending channel. Thus, to set the bull run ahead, it would need to break past the top of the channel on a weekly chart. All eyes will be on the Fed rate cut with the market still uncertain whether Powell would opt for a 25 bps rate cut or a 50 bps rate cut. Banking giants JPMorgan and Goldman Sachs are expecting a modest beginning with a 25 bps interest rate cut.

Bitcoin Price Needs Firm Closure above $61,900

Popular crypto strategist Rekt Capital stated that the BTC price has been forming a series of lower highs since late July. Thus, the key level to watch this week would be $61,900, breaking above which could push Bitcoin into an upward trajectory.

Courtesy: Rekt Capital

Historically, BTC has always given a breakout nearly 150-160 days following the Bitcoin halving event. Thus, going with this historical calendar, the Bitcoin price will breakout from its reaccumulation range by late September 2024.

Furthermore, September has historically been the month of giving poor returns with an average decline of 4.48%. In contrast, October has shown average monthly gains of 22.9%. Thus, this could be the final phase of the long-term consolidation for BTC.

Will Fed Rate Cut Fuel BTC Rally?

At the FOMC meeting on September 18, the US Federal Reserve is planning for a major pivot in its monetary policy and opting for monetary easing through interest rate cuts. However, the Street remains divided on whether this would be a 25 bps rate cut or a 50 bps rate cut.

The common consensus in the market has been that the Fed rate cut would flood more liquidity thereby being a catalyst to the Bitcoin price rally. However, renowned economist Peter Schiff stated that the rate cuts won’t actually benefit BTC. He said that this would eventually crush the dollar and reignite inflation.

On the other hand, Massachusetts Senator Elizabeth Warren has demanded a 75 bps rate cut from the Fed. Custodia Bank founder Caitlin Long said that this would be interesting to watch whether Senator Warren has any weight of word in DC. In the past, she called Powell “a dangerous man” and it’s unlikely that the central bank governor would give any thought to her demands.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast with a keen understanding of financial markets. His interest in economics and finance has led him to focus on emerging Blockchain technology and cryptocurrency markets. He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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Analyst Predicts New ‘Blood Monday’ With 0.50% Fed Rate Cut Looming

Published

3 days ago

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September 17, 2024

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Este artículo también está disponible en español.

As Bitcoin (BTC) grapples with a challenging market environment, it has struggled to regain momentum, hovering around the $53,000 and $60,000 levels for six consecutive weeks. 

After losing the crucial $70,000 threshold on August 1, the largest cryptocurrency remains at risk of further declines, particularly with the upcoming Federal Reserve (Fed) meeting on September 18, where a 0.50% rate cut could significantly impact its price.

BTC’s Future Hangs In Balance

Recent insights from crypto analyst Doctor Profit suggest that the market is closely divided, with equal chances—50%—of a 0.25% or 0.50% rate cut. However, Doctor Profit is confident that the Fed will opt for the larger cut, citing a need for decisive action in the current economic climate. He notes, “A 0.25% cut is simply too little for where we are now.” 

The analyst argues that failing to implement a 0.50% cut could lead to market turmoil reminiscent of the “Blood Monday” experienced on August 5, which saw Bitcoin plummet to lows of $48,900, resulting in a nearly 25% price drop.

According to Doctor Profit, this could include acknowledging the Fed’s past strategies and an optimistic outlook for the economy, potentially paving the way for future rate cuts.

Given these potential scenarios, the analyst warns of the potential for market manipulation and “scam wicks” that could mislead investors on both sides of the trade. In addition, geopolitical tensions, particularly regarding the Israel-Lebanon situation, add another layer of complexity and may exacerbate market fears and volatility.

Despite the short-term risks, Doctor Profit remains bullish on Bitcoin’s long-term prospects, particularly through the end of Q3 2025.

The analyst believes that any short-term panic will ultimately be countered by a return to expansive monetary policy, as seen in the recent influx of USDT and other cash injections into the market. He highlights that once the rate cuts are implemented, the Fed’s money printing will likely resume, providing a foundation for recovery.

Bitcoin Price Analysis

Looking deeper into the current price action, analyst Ali Martinez recently noted that Bitcoin trades within a parallel channel on the hourly chart. 

Martinez contends that Bitcoin could bounce back to the middle or upper levels if the lower border holds, targeting $60,200 or $62,000. However, Martinez warns that a break below the support level of $58,100 could lead to a drop towards $55,000.

Zooming out to a broader perspective, Martinez also highlights concerning trends in Bitcoin’s Market Value to Realized Value (MVRV) Momentum. Since breaking below the $66,750 mark in June, Bitcoin has been in a downtrend, and this negative trend has yet to show signs of reversal. 

To invalidate this indicator, BTC needs to break above this level and reclaim it as support, which could signal the continuation of an expected rally towards the all-time high of $73,700 reached in March this year.

Bitcoin
The daily chart shows that BTC’s price is trending downward. Source: BTCUSDT on TradingView.com

When writing, the largest cryptocurrency on the market is trading at $58,440, recording losses of over 3% in the 24-hour. 

Featured image from DALL-E, chart from TradingView.com



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BlackRock And Bitcoin ETFs Saved BTC Price: Bloomberg Analyst

Published

5 days ago

on

September 15, 2024

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Bloomberg analyst Eric Balchunas has asserted that BlackRock and the Bitcoin ETFs saved the BTC from massive decline. The analyst’s statement related to rumors that the world’s largest asset manager receives Bitcoin IOUs from the Coinbase crypto exchange. A popular crypto analyst has outlined a theory suggesting that the asset manager may be shorting BTC with these IOUs, leading to the coin’s decline at different times.

BlackRock And Bitcoin ETFs Saved Bitcoin Price

Balchunas stated in an X post that BlackRock and the Bitcoin ETFs repeatedly saved the BTC price “from the abyss.” The analyst made this statement to rebut arguments that traditional investors were to blame every time the coin declined. He added that he understands why these exist, as people want to “scapegoat the ETFs” because they find it hard to believe that the native HODLers could be the sellers.

However, Eric Balchunas claimed that these Bitcoin natives are indeed the sellers. He remarked that they are sabotaging the Bitcoin price, not traditional investors. Popular Bitcoin analyst Ali Martinez recently revealed how BTC miners had sold over 30,000 $BTC in three days, proving Balchunas’s point that the “call is coming from inside the house.”

It is also worth mentioning that these Bitcoin ETFs contributed significantly to the BTC price reaching a new all-time high (ATH) of $73,000 in March earlier this year. These funds witnessed impressive net inflows upon launch, causing new money to flow into the BTC ecosystem and spark a rise in its price. BlackRock, in particular, has continued to hold on to its coins, recording only three daily net outflows since its January launch.

Coinbase Helping TradFi To Supress Bitcoin

There have been rumors that Coinbase is writing Bitcoin IOUs for BlackRock, leading to price suppression. Crypto analyst Tyler Durden is one of those who have continued to make such allegations. Earlier this year, the analyst explained that the crypto exchange’s IOUs to the asset manager means they can borrow as much Bitcoin to short and not show proof that they hold the coin 1:1.

To further prove his point that the world’s largest asset manager was suppressing BTC price with Coinbase’s help, Durden alluded to data from Cryptoquant. He claimed the US crypto exchange was the biggest buyer and seller on every bottom and top in this range. The analyst also opined that the asset manager will put a top on the market at some point and crash it or create a major pullback.

Meanwhile, Coinbase CEO Brian Armstrong responded to Durden’s allegations, clarified how ETF mints and burns are processed, and ultimately settled on-chain. He indicated there was no foul play, noting that they are audited and these reports are available to everyone. Armstrong added that they had no right to share the addresses of their institutional clients, including BlackRock.

At the time of writing, Bitcoin is trading at around $60,000. As Coingape reported, the projected rate cuts next week could benefit the BTC price. Historically, this macro event is bullish for the coin.

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Boluwatife Adeyemi

Boluwatife Adeyemi is a well-experienced crypto news writer and editor who has covered topics that cut across DeFi, NFTs, smart contracts, and blockchain interoperability, among others. Boluwatife has a knack for simplifying the most technical concepts and making it easy for crypto newbies to understand. Away from writing, Boluwatife is an avid basketball lover and a part-time degen.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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