Bitcoin at Pivotal Point as Bear Market Beckons: Onchain Data

Original author: Oliver Knight

Original source: coindesk

Compiled by: Mars Finance, Eason

Several factors suggest that the Bitcoin price will continue to fall, but Bitcoin whales continue to accumulate at the fastest rate in more than a year.

  • The Bitcoin Profit and Loss Index is hovering near its 365-day moving average; previous downside crossovers have led to major market corrections.

  • Tether’s market capitalization growth, often considered a key driver of the bull run, has stalled.

  • However, large BTC holders increased their Bitcoin holdings by 6.3% during the month, reaching the highest level since April 2023.

Figure 1: Bitcoin CryptoQuant Profit and Loss Index

Image source: CryptoQuant

Bitcoin is at a critical stage in this market cycle as several factors signal that prices will continue to fall while others suggest that a bottom is imminent. Currently trading at $57,700, Bitcoin has rebounded from last week's low of $53,600 but remains in a technical downtrend since its all-time high of $73,800 in March and has posted consecutive lower highs of $71,300 and $63,900. Data from CryptoQuant suggests that a major correction or the start of a prolonged bear market could be imminent as the Profit and Loss Index hovers around its 365-day moving average. Previous downside crossovers were precursors to the deep declines that began in May and November 2021.

CryptoQuant’s Bitcoin Bull-Bear Cycle Indicator is also approaching a key level that could signal a bear market.

Figure 2: Bull-Bear Market Cycle Indicator

Image source: CryptoQuant

CryptoQuant added that the lack of growth in Tether’s (USDT) market cap also suggests that a rebound may be difficult to achieve, as historical recoveries can be attributed to rising stablecoin liquidity. However, Bitcoin whales have been increasing their holdings during the recent downtrend, with large holders increasing their holdings by 6.3% over the past month, the fastest pace since April 2023. Germany’s aggressive selling of seized Bitcoin also appears to be coming to an end, with the country nearly emptying its wallet after seizing 50,000 Bitcoin from Movie2k in January. Other positive factors, such as the approval of an Ethereum ETF in the United States and the continued growth of the U.S. stock index that Bitcoin has historically correlated with, suggest that the upside will continue in 2024 despite signs of weakness in the short term.