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▲ Bitcoin (BTC)/AI generated image
An analysis suggests that past bear market patterns could be replicated in on-chain cycle analysis indicators. If the indicator follows its historical trend, Bitcoin's price could fall below $58,000. Warnings about this are growing louder in the market.
According to crypto media outlet Cointelegraph on July 7 (local time), on-chain analytics platform CryptoQuant diagnosed that the profitability bottom for Bitcoin (BTC) supply is approaching. The core of this analysis is the NUPL indicator, which is related to Market Value to Realized Value (MVRV) and measures unrealized pain and profit. This indicator currently stands at 0.158. CryptoQuant contributor TheChessOnChain smoothed the NUPL indicator with 30-day and 100-day Exponential Moving Averages (EMA) for analysis. The contributor described it as the cleanest cycle clock on-chain.
Currently, Bitcoin's price is moving slightly above $60,000. Under these conditions, the NUPL 100-day EMA is 0.215. Compared to the bottom levels of past bear markets, there is still significant room for further decline. Bitcoin has formed a cyclical bottom every time the 100-day EMA has fallen below 0. Notable examples include late 2011, when it was around $2, and January 2015, when it was $182. The 2018 bear market, which saw it hit $3,206, and November 2022, when it plummeted to $15,792 due to the FTX incident, showed the same trend.
CryptoQuant analyzed that the NUPL indicator has progressively formed higher lows throughout Bitcoin's history. Consequently, they added that it does not necessarily need to fall below the 0-line this time. The market is expected to follow two paths in the future. The first is a scenario where the 100-day EMA breaks below the 0-line, similar to the previous four bottoms. The second scenario is that a bottom forms above the 0-line, aligning with the trend of shallower drops each time, without breaking the 0-line. According to the contributor's statement, whether the 0-line is reached in the coming weeks will be the most important indicator to watch.
Market participants anticipate the emergence of a new macro bottom before the bulls regain control. In recent weeks, bear market reversal signals similar to those in 2022 have been observed on-chain. Nevertheless, caution regarding further declines still prevails. Supply data analyzed by another CryptoQuant contributor, Axel Adler Jr., also sends mixed signals regarding short-term and medium-term price volatility. According to Adler's calculations, it could take another two months for the supply of Bitcoin in a loss state to reach the endpoint of past bear markets.
[Article Key Summary]
-CryptoQuant analyzed that if the NUPL 100-day Exponential Moving Average indicator repeats past bear market bottom patterns, Bitcoin's price could fall below $58,000.
-Currently, with Bitcoin trading above $60,000, the indicator value is 0.215, leaving room for further decline below the 0-line, which was a cyclical bottom in the past.
-Experts present two scenarios: the traditional path where the indicator breaks the 0-line, and a scenario where a bottom forms above the 0-line in line with a gradually shallower downtrend, and are closely monitoring developments in the coming weeks.
*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*
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