Bitcoin, the worst is over...Experts: "A boring sideways market rather than an upward reversal"

▲ Bitcoin (BTC), US/ChatGPT generated image

As Bitcoin (Bitcoin, BTC)'s market stress indicators ease, the sharp decline has entered a calming phase. However, analysts warned that the current situation is likely a bottoming-out phase with a boring sideways market rather than a strong upward reversal.

According to a report by virtual asset specialized media NewsBTC, CryptoQuant analyst MorenoDV_ analyzed in a report on April 9 (local time) that Bitcoin's on-chain and derivatives stress cycle has entered its final stage. The stress cycle refers to a period where unrealized losses expand, forced liquidations occur, and futures basis is squeezed. Currently, Bitcoin is moving out of this acute stress phase and undergoing a market restructuring process.

MorenoDV cited the fact that Bitcoin's short-term Sharpe ratio has fallen to around -40, a level near past lows. Looking at cases from 2015, 2019, and 2020, whenever this index reached that level, Bitcoin always successfully rebounded after passing through a strong undervalued phase. The analyst added that while Bitcoin is currently in a historically strong buying zone, significant patience will be required before it leads to an actual price increase.

The bottoming process is broadly divided into three stages. The first is the stage where panicked investors engage in sell-offs, and the second is the stage where selling pressure gradually decreases and prices stabilize. The final third stage is when actual buying demand flows in, leading to an uptrend. The analyst diagnosed that Bitcoin is currently in the second stage, a medium-term stabilization phase. Selling pressure has decreased, but strong buying momentum capable of driving the market up has not yet been detected.

Macroeconomic uncertainties and a lack of liquidity are also factors slowing down market recovery. QCP Strategies analyzed in a recent report that Bitcoin's movement is closer to a temporary stagnation than a sustained upward reversal. Market sentiment remains subdued, and it is expected to take more time for buying demand to fully materialize. In the short term, attempts to reclaim the $72,000 level will continue, but a highly volatile range-bound market is likely to persist.

Bitcoin briefly reclaimed $72,000 on April 9 but is currently trading in the low $71,000s. Selling pressure has eased, but investors looking for new opportunities are maintaining a wait-and-see attitude to confirm a clear market direction. While data confirms entry into a low-point buying zone, a tedious battle of time is expected before it translates into actual profits.

*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.*