- Bitcoin saw short-term volatility increase as the halving approached.
- The statistics predict a bullish future for Bitcoin in the long term.
Bitcoin [BTC] saw a sudden price drop on April 12 and 13. Selling pressure heading into the weekend saw BTC fall 14.5% from $70.9k on Friday to $60.6k, marking Saturday’s low.
This sparked fear in the altcoin market and contributed to widespread selling pressure.
Market participants who have called for a top as the halving approaches would be ecstatic, but this view could be short-sighted. The long-term trend remains firmly bullish. An influx of new investors was still underway.
The lifeblood of the running of the bulls
a CryptoQuant Insights message from analyst Crypto Dan noted a decrease in own share of Bitcoin for more than six months. This was evident from the Bitcoin UTXO Age Bands% statistic.
This reduced share implied that newer investors were entering the market. This new demand is the fuel that would cause the next run. According to the analyst, this run has been going on for three months.
AMBCrypto’s analysis of the same metric also revealed another interesting factor. Over the past two cycles, BTC stock’s decline from 6 to 12 months during the bull run has been the steepest.
In the weeks after the cycle top, the trend was higher in the same age category.
In 2021, this uptrend came only after the downtrend had leveled off for three months.
This suggested that investors could wait for the 6- to 12-month age range to form a one-month sideways trend before selling their BTC.
This is just one piece of the complex puzzle, and investors must also use other metrics and market trends to make that decision.
Some of the other metrics that could mark a cycle top
Two of the most popular Bitcoin long-term metrics are the MVRV ratio and the Net Unrealized Profit/Loss (NUPL). They also reflected the bullish state of the market in recent months.
The MVRV ratio was 2.25 on April 13. This is well below the 3.7 that historically marked the cycle tops. The price development in recent months caused the MVRV ratio to show a higher trend.
The meaning is that Bitcoin’s market capitalization has risen faster than Bitcoin’s realized capitalization. In other words: the motive to sell has grown, but was not yet critical.
Similarly, the NUPL also rose, showing that it was more profitable to sell Bitcoin as prices rose.
With a reading of 0.55 on April 13, there was still some way to go before the metric would reach the 0.7 that has marked cycle tops in the past.
Read Bitcoin’s [BTC] Price forecast 2024-25
Investors can monitor the behavior of all three metrics in the coming months to understand how close Bitcoin is to the top of this run.
However, it must be remembered that the Bitcoin ETFs are a colossal new addition to the market. It is unique to this cycle and the effects of such giants on the market are difficult to predict.