Bitcoin, the leading cryptocurrency by market capitalization, has recently undergone a significant and sudden price correction, sparking debate among investors.
Concerns have been raised about whether this downturn marks the end of the current bull cycle or represents just a temporary setback.
While short-term holders face losses, long-term metrics provide a broader perspective on Bitcoin’s trajectory, as analyzed by CryptoQuant’s Avocado Onchain in a recent publication. report.
Opportunity or end of the bull cycle?
According to Avocado Onchain, the realized price for investors who entered the market during Bitcoin’s recent peak at $98,000 puts them in a losing position.
However, for those who invested between one and three months ago, the realized price is significantly lower at $71,000, providing a cushion against the current correction.
Avocado pointed out that historical patterns from Bitcoin’s 2021 bull cycle show similar alternations between record highs and sharp corrections, indicating that these dips do not necessarily mark the end of the cycle. Instead, they have historically been “opportunities” for market rebalancing and resulting growth.
An important indicator analyzed is the 30-day moving average of the short-term SOPR (Spent Output Profit Ratio). This metric tracks whether recent market participants are selling at a profit or loss.
Current SOPR data shows that the recent short-term inflows into Bitcoin have not yet led to substantial profit-taking. Unlike previous cycle peaks characterized by aggressive selling, the ongoing correction appears muted, indicating the market may still have room for upside.
Short-term Bitcoin declines vs. long-term trends
In addition, Avocado Onchain emphasizes the importance of distinguishing between short-term corrections and broader cycle trends. Bitcoin’s tendency to rebound after corrections in previous bull cycles reinforces the idea that the current downturn may not mark the end of the cycle.
These insights align with the behavior of long-term investors, who often use corrections to consolidate their positions, strengthening market resilience.
Avocado concluded the analysis, noting:
For investors who have yet to enter the market, this could be an excellent opportunity to buy Bitcoin at a discount. Rather than succumbing to panic selling during short-term downturns, taking a long-term perspective and a dollar-cost averaging (DCA) strategy could be a more effective approach.
At the time of writing, Bitcoin is seeing a gradual recovery in its price increase of 1.3% in the past 1 hour. Regardless, the asset still seems to be overshadowed by the bears as BTC is down 3.5% over the past day and 10.5% from the peak of $108,135 recorded last week.
Featured image created with DALL-E, Chart from TradingView