Bitcoin is the leading cryptocurrency by market capitalization, having recently experienced a significant and sudden price adjustment that sparked debate among investors.
There are concerns whether this downturn signals the end of the current bull market cycle or merely represents a temporary setback.
While short-term holders are facing losses, long-term indicators provide a broader perspective on Bitcoin's trajectory, as analyzed in a recent report by CryptoQuant's Avocado Onchain.
Opportunity or end of the bull market cycle?
According to data from Avocado Onchain, investors who entered the market during Bitcoin's recent peak of $98,000 are currently at a loss based on their realized prices.
However, for those who invested one to three months ago, the realized price was noticeably lower at $71,000, providing a buffer for the current correction.
Bitcoin UTXO age distribution. | Source: CryptoQuant
Avocado points out that the historical pattern of Bitcoin's bull market cycle in 2021 reveals a similar alternation between historical peaks and sharp corrections, suggesting that these declines may not necessarily signify the end of the cycle. Instead, they have historically been 'opportunities' for market rebalancing and subsequent growth.
A key metric analyzed is the 30-day moving average of the short-term SOPR (Spent Output Profit Ratio). This metric tracks whether recent market participants are in profit or loss.
Current SOPR data shows that the recent short-term inflows into Bitcoin have not resulted in significant profit-taking. Unlike previous cycles characterized by aggressive sell-offs at peaks, the ongoing correction appears mild, suggesting that the market may still have room for upward movement.
Bitcoin short-term spent output profit ratio. | Source: CryptoQuant
Bitcoin's short-term downturn vs. long-term trend
Additionally, Avocado Onchain emphasizes the importance of distinguishing between short-term corrections and broader cycle trends. Bitcoin has a tendency to rebound after corrections in past bull market cycles, reinforcing the view that the current downturn may not indicate the end of the cycle.
These insights align with the behavior of long-term holders, who often use corrections to consolidate positions, thereby enhancing market resilience.
Avocado summarized the analysis and noted:
For investors who have not yet entered the market, this may be a great opportunity to buy Bitcoin at a discounted price. Rather than succumbing to panic selling during a short-term downturn, adopting a long-term perspective and dollar-cost averaging (DCA) strategy may be a more effective approach.
At the time of writing, Bitcoin's price has gradually rebounded, surging 1.3% in the past hour. Nevertheless, the asset still appears to be overshadowed by bears, as BTC has fallen 3.5% in the past day, down 10.5% from last week's peak of $108,135.
