Bitcoin miner exit cycle could signal market bottom, paving way for renewed interest

However, to confirm a bull rally, specific conditions must be met

After a week of bearish movement, Bitcoin [BTC] fell from the previous resistance level of $65,000 to below $61,000. However, optimism seems to be brewing in the market, with the cryptocurrency valued at nearly $62,000 at press time.

However, the second week of Q4 could see a price correction, especially as profit takers cash out and exit the cycle. This includes miners who capitulated as BTC approached $62,000.

However, unless a bottom is fully in place, it might be difficult for the bulls to spark a sustained rally.

Miner Exit May Signal Market Bottom

On the daily price chart, BTC’s weekly trend mirrors the price action seen in mid-August, when a rejection near $65,000 halted a potential bull run.

During this period, miners exited the cycle after five consecutive days of downward pressure, with holdings falling from 1.817 million to 1.814 million.

A similar trend has been seen recently. Over the past week, as Bitcoin retreated from $65,000 to $60,000, miner reserves have fallen significantly, from 1.814 million to 1.811 million at press time.

Typically, the exit of weaker investors tends to lead to more stable markets, allowing stronger investors to accumulate positions at favorable prices.

If this trend continues, miner breakeven could signal a market bottom. This could provide an ideal dip-buying opportunity for new buyers as weak parties exit to lock in profits.

However, as mentioned earlier, for a bullish cycle to begin, it is critical that $61,000 turns into support. While miners exiting could help confirm this support level, other conditions must also align.

LTH is confident in Bitcoin bulls

Unlike miners who are cutting their losses before the market drops further, holders who have held onto Bitcoin for more than 155 days appear to be taking profits.

LTH SOPR recently hit a new high. Historically, such moves drive positions into FOMO and fuel expectations of future gains in the next cycle.

If LTH avoids panic selling, which seems likely, a short-term price correction could occur. This could turn the $61,000 resistance level into support before bulls target the next resistance at $64,000.

In short, Bitcoin’s drop from $65,000 to $60,000 is key to breaking out of weakness and establishing $61,000 as the next support level.

This decline filters out less committed investors, allowing stronger holders to accumulate positions.

However, while the data suggests solid fundamentals, AMBCrypto investigated further to determine if the recent rally was real or just a short squeeze.

BTC bulls are regaining control

Over the past four days, long positions have regained dominance in the derivatives market, preventing bears from effectively shorting Bitcoin.

While this is a bullish sign, it also means that the influx of long positions has put pressure on shorts, leading to massive liquidations.

Therefore, this does not completely rule out a short squeeze scenario, but could serve as an entry point for a bullish reversal, fueling buyer excitement.

Overall, with the $61,000 support confirmed and renewed optimism on long positioning, the bulls are likely to defend $62,000 next, which could result in a rally to $64,000.

However, for this to happen, close monitoring of short sellers is crucial.