The cyclicality of #BTC is closely related to the market supply and demand conversion.
A decrease in the supply ratio means that LTH is distributing chips to STH, and an increase in the supply ratio means that LTH is accumulating chips.
In the 2016-2018 bull market cycle and the 2019-2021 bull market cycle, there were two large-scale distributions (see the green arrow in the figure), and the starting position of the first distribution corresponded to the price of #BTC being at the bottom of the cycle, for example: 2016-2018 cycle: When the first distribution began, the BTC price was around US$240; 2019-2021 cycle: When the first distribution began, the BTC price was around US$4,000;
The time point when LTH started to distribute in this cycle was different from the previous two rounds. At the bottom of the cycle, there was no distribution event, but the first distribution began on December 5, 2023, when the BTC price was US$44,000. Through observation, we can find that the current LTH/STH supply ratio has begun to show a turning trend (see the red mark in the figure).
In the first two cycles, every time the first distribution ended and the LTH/STH supply ratio showed a turning point (see the blue mark in the figure), the BTC price had a pullback. 2016-2018 cycle: pullback -30%; 2019-2021 cycle: pullback -60% (3.12 incident occurred). But this does not mean that there will also be a 30%-60% pullback in this cycle (the macro and micro environments are different and there is no comparability).
But if it is confirmed that this is the turning point, it may mean that the market may usher in a period of pullback. Of course, the best case is that the pullback is not deep, similar to a wide range of fluctuations. When the pullback ends and the second distribution begins, it often corresponds to the main rising wave of the bull market. This is only an analysis from a micro perspective.
If you want to combine the macro, the high point of the next stage may appear in the "US election period". Due to repeated inflation, the market's expectations for the Fed's interest rate cuts have been compressed again and again.
Even if the unemployment rate data shows a slight increase or is higher than expected, it will only give the market a short breath at most. For the experts in expectation management, the "traders" of the Federal Reserve, they will definitely say a few "hawkish words" from time to time to dampen market sentiment.
Friends can combine macro and micro data more, which may give us a relatively objective conclusion. In short, what we can do for the current environment is to remain cautious and firm in confidence!
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