Bitcoin has been hovering in the $60,000 to $70,000 range for nearly four months, which is frustrating, but such consolidation periods are not uncommon after Bitcoin's halving events. Looking back at the halving cycles in 2016 and 2020, we can see similar consolidation phases, which are usually followed by the so-called "banana zone", the final rapid rise phase.
However, we cannot just settle for “that’s how it was in the past” but should analyze current market conditions to learn from and potentially profit from them. On the surface, the simplest and most obvious answers to why there is a large amount of supply around $70,000 might include:
A large amount of funds entered the market in advance before the halving event.
The halving of miners’ revenue has forced them to sell some of their Bitcoin.
The impact of US tax factors.
In addition to these obvious reasons, there are some objective indicators worth noting:
Market Value to Realized Value (MVRV): This is the ratio between the weighted average purchase price of Bitcoin and the current market price. In March, MVRV peaked at a ratio of 2.75, indicating that when the Bitcoin price was $73,100, the average purchase price was $26,580. Although this metric is not completely accurate (because centralized exchanges may not move tokens but simply update database entries), it usually rises in sync with market prices peaking, showing signs that investors need to take profits.
Changes in long-term Bitcoin holders: Another interesting indicator is those wallets that have held Bitcoin for more than 155 days. Typically, market tops are formed when these holders start selling, and market bottoms are formed when they start buying.
Dollar Supply: Considering that Bitcoin is priced in U.S. dollars, it is crucial to observe changes in the dollar supply. How much money is circulating in the market? Is this amount increasing or decreasing? How fast is it increasing? These factors will affect the market's trend, especially when other things are similar, and can lead to Bitcoin's strength or weakness relative to the dollar.
In addition, there are some other signals:
Coinbase has seen a dramatic rise in app download rankings within a day.
Bitcoin ETF inflows peaked at $1.045 billion before slowing dramatically.
Lots of positive regulatory news.
Active selling by miners after the halving.
Overall, I don't think we are at the top of the market right now. While it's hard to predict exactly when the next rally will occur, I think we are closer to breaking out of the end of the current range than before. Taking all of the above into account, I think the current situation is unlikely to be a cycle top for the market.