Bitcoin is the leading cryptocurrency by market capitalization and has recently experienced a sharp and sudden price adjustment, sparking debate among investors.
Concerns are growing over whether this economic 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 trend, as analyzed in a recent report by CryptoQuant's Avocado Onchain.
Opportunity or the end of the bull market cycle?
According to Avocado Onchain, the realized price of investors who entered the market during Bitcoin's recent peak of $98,000 puts them at a loss.
However, for those who invested one to three months ago, the realized price is significantly lower at $71,000, providing a buffer for the current adjustment.
Avocado points out that the historical pattern of Bitcoin's 2021 bull market cycle shows alternating between record highs and significant pullbacks, indicating that these declines do not necessarily mean the end of the cycle. Historically, they have been 'opportunities' for market rebalancing and subsequent growth.
A key metric analyzed is the 30-day moving average of the short-term SOPR (Spending Output Profit Ratio). This indicator tracks whether recent market participants are selling at a profit or a loss.
Current SOPR data shows that the recent influx of short-term funds into Bitcoin has not led to significant profit-taking. Unlike previous cyclical peaks characterized by large sell-offs, the current pullback appears to be more moderate, suggesting that the market may still have room for upward movement.
Bitcoin's short-term decline versus long-term trends
Additionally, Avocado Onchain emphasized the importance of distinguishing between short-term corrections and broader cyclical trends. The trend of Bitcoin rebounding after adjustments in previous bull market cycles reinforces the view that the current slump may not signify the end of the cycle.
These insights align with the behavior of long-term holders, who often use corrections to consolidate their positions, thereby enhancing market resilience.
Avocado summarized the analysis and pointed out:
For investors who have yet to enter the market, this could be a great opportunity to purchase Bitcoin at a discounted price. Rather than getting caught in panic selling during a short-term slump, adopting a long-term perspective and a dollar-cost averaging (DCA) strategy may be a more effective approach.
At the time of writing, Bitcoin's price is gradually rebounding, having risen 1.3% in the past hour. Nonetheless, the asset still appears to be under pressure from bears, as BTC has fallen 3.5% in the past day, down 10.5% from last week's peak of $108,135.
