Bitcoin’s sell-off this week has reignited questions about whether the market has already hit a local low. Chris Kuiper, CFA, VP Research at Fidelity Digital Assets, says several on-chain and sentiment gauges now resemble previous bull market corrections, while emphasizing that nothing is certain.
“Like everyone else, I never know for sure,” says Kuiper wrote on
Has the Bitcoin Bottom Been Reached?
The Glassnode chart he shared compares Bitcoin to the realized price of short-term holders (STHs) and their MVRV ratio – a measure of whether this cohort is making an overall profit or loss. In previous uptrends, local lows have often occurred when the STH MVRV fell below 1, briefly putting recent buyers underwater before the price recovered.
Kuiper notes that the current pullback has pushed STHs back into loss territory, in a manner similar to previous mid-cycle pullbacks. “If this is indeed a steady 20 to 30% decline within the current bull market, then the MVRV ratio is showing a similar trough as before, testing the mettle of short-term holders before they reset to move higher,” he wrote.
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His second point of reference is the Bitcoin Fear & Greed Index, which has gone from persistent “greed” and “extreme greed” back to “fear,” with episodes of “extreme fear.” According to Kuiper, the index “tends to reach extreme levels at these local highs and lows,” indicating that sentiment has reset after the recent euphoria. The index currently stands at 11.
“This is not a prediction,” he cautioned, “but given the lack of negative fundamental news or changes (and in fact the opposite lately), this data tips my estimated probabilities toward a regular and healthy decline.”
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Other analysts are more cautious. Bitwise senior research associate Max Shannon flagged “further potential negative impacts from equity market correlation, lower rate cut likely in December, LTH continues to sell at BTC’s ‘IPO moment’.” Still, he added that “risk-return profiles [are] improve on these levels imo. Things are stretched and many contrarian indicators are flashing green.”
Crypto investor Richard Haas pointed out a departure from previous bull market corrections, warning that “previous bull corrections never closed more than 10% below the 200ma cloud and never dropped the 50dma cloud.”
For now, Kuiper believes that on-chain stress among short-term holders and a sharp reset in sentiment are consistent with a typical bull market shakeout. Whether this marks a sustainable low or just a pause in further decline remains unresolved – and, as he points out, ultimately comes down to probabilities, not certainties.
At the time of writing, BTC was trading at $92,019.
Featured image created with DALL.E, chart from TradingView.com