Author: Axel Adler Jr, Source: Author's blog; Translated by: Tao Zhu, Golden Finance

Today we will discuss the following topics:

1. Market review.

2. Why do we say the bull market is not over yet?

3. What is the real demand for previously expensive tokens?

4. End of consolidation and support level.

5. Conclusion.

Throughout the week, Bitcoin traded between $61-56K with no clear trend forming. This was basically a very quiet trading week. The resistance level was the 200-day moving average at $68.2K, and the price failed to hold that level.

An interesting development this week was the news from Dubai, which recognized cryptocurrencies as an acceptable method of paying wages, indicating the growing adoption of digital currencies.

Another important event concerns ETFs: BlackRock’s AUM surpassed Grayscale, thanks to Grayscale’s outflows and BlackRock’s inflows. Also, Grayscale appointed a new CEO. In case you don’t know, the former CEO Michael Sonnenshein launched a Bitcoin Trust that attracted a lot of investment totaling 653K BTC. The problem was that clients were unaware that there were smart money players in the market who were happy to sell expensive cryptocurrencies to newbies. As a result, some clients had to wait four years to realize their profits. In fact, Bitcoin’s four-year CAGR has never been lower than 24%, but the fact that investors in the fund had to wait four years is quite amazing.

Is the bull market over?

A bull run ends when the demand for expensive tokens is less than the supply of tokens that want to be sold. Let’s look at the data to determine if the current market situation can be considered the end of a bull run cycle.

The first thing we need to understand is whether there is a bubble in the market right now.

The Bubble & Crash Market Structure Indicator shows that the first bubble of this cycle formed at the $73,000 level. The current value has dropped to 1.02, which is the baseline, indicating that the market is not in a bubble. Bubbles form when Bitcoin's market value grows faster than its actual market value, which essentially reflects speculative interest. In other words, at such times, many investors buy Bitcoin at high market prices due to FOMO (fear of missing out).

The next indicator that helps us understand if the bull market has ended is the standard deviation of MV/RV smoothed by two moving averages over 30 and 365 days.

In the graph, we can see that the current bull cycle is developing quite steadily, without major anomalies or sharp rises. The 30DMA MVRV Z-score is 1.8, indicating that Bitcoin is minimally overvalued compared to the annual average of 1.6. We see that in previous cycles, the 30DMA MVRV Z-score rose above 5, which was usually accompanied by price peaks and subsequent corrections. This confirms that the current bull cycle is in an active phase, and the market can be considered bullish as long as the indicator does not reach extreme levels that could signal the risk of a major correction.

What is the real demand for cryptocurrencies?

First, let’s look at the behavior of experienced investors. We see that the activity of long-term holders peaked when Bitcoin reached $73,000. This means that at this level, a significant portion of experienced investors decided to take profits, causing the indicator to rise to 23%.

Currently, activity from experienced investors has dropped to 4%. This suggests that long-term holders are in no rush to sell their assets despite current high price levels. This could be a sign of confidence in further growth and expectations of future price increases.

Let’s take a look at how many people are willing to sell Bitcoin on exchanges. The value of the exchange traffic multiple indicator dropped from 1.73 to 0.8, indicating a significant decrease in sales activity on the exchange.

All of this tells us that there is little bearish pressure on the market right now and investors are in no rush to sell assets on exchanges.

Let’s assess demand by looking at the number of tokens that are currently losing money and bought at prices above the current market price of $598,000.

The Loss Supply indicator shows the total amount of Bitcoin that is currently losing money (in percent). The current value is 22%, which means that 22% of all Bitcoins were purchased at prices above $598,000, which is about 4.3 million BTC. Such a large number of token transactions have occurred in the past five months. Can this be considered sustainable demand for a previously expensive coin? Apparently yes.

Finally, let's look at the indicators of realized profits and losses.

The current value is 3.4 points, which actually means selling at a loss. A further drop of 3.4 points in the indicator will trigger an orange alert and define it as a local bottom. Therefore, the current 365-day SMA average purchase price of BTC can be regarded as a strong support level for continued consolidation.

in conclusion

We are approaching the end of the consolidation, which in my opinion is progressing very well. We see that previously expensive tokens are now in demand and that this is happening within the framework of a bull cycle. We see that the current liquidation of tokens is at breakeven or loss, which suggests that the consolidation is about to end. We also see that the market is not frothy, and the standard deviation of the MV/RV indicator suggests that the current Bitcoin price is not overbought. We also understand that there is little bearish pressure on exchanges, and Bitcoin's 365-day SMA average purchase price ($50,000) may act as a strong support level at the end of the consolidation.

Good luck in the upcoming trading week!