On-chain data suggests Bitcoin has yet to confirm a bull market reversal
The bear market has not ended, sellers were still in control, and supply metrics showed a transition to a bull market has not yet come about.
Bitcoin [BTC] faced minor losses in recent days of trading. Its spot ETF inflow streak, the longest in nine months, has just been broken by a $225.1 million outflow on Thursday, July 23.
Bitcoin was still trading within a long-term bearish price trend. The bulls’ inability to break out past the $67k local supply zone has given control of the market back to the bears.
Here’s what that means for investors
Bitcoin MVRV and realized losses point toward THIS
The MVRV ratio, when above 1, shows that the aggregate holder is still in profit. Historically, the depths of bear markets have only been reached when the MVRV falls below 1.
Crypto analyst Rei Researcher pointed out that this was not the case so far in the current cycle. The market was far from bullish overheated territory, but not quite yet at bear market bottom.
Onchain data showed that the cyclical capitulation might not have ended yet. The recent bounce may have offered some long-term holders an opportunity to reduce exposure ahead of any further weakness.
Analyst The Chess Onchain observed that the Bitcoin supply in profit was currently at 57.5%. The 30-day average of the long-term holder SOPR must reclaim 1.0 to reliably mark the end of a bear trend. This metric is at 0.86 now.
With this occurrence as a historic bar, the analyst found that the supply in profit metric was at atleast 64%. Until the metric climbs back above these levels and stays there for a few weeks, any seeming price recovery can be considered to happen within a bearish regime.
Additionally, when the price bounce began in early June, BTC older than six months spiked to 12%-16% of exchange inflows, and has since fallen to 0.8%.
A cohort of holders that bought between 1 month and two years ago have their cost basis in the $72k-$102k window.
The supply overhang is another threat to any sustained recovery. Therefore, another wave of selling and a deeper capitulation to force these holders to sell is a possibility traders and investors must be prepared for.
The data suggests Bitcoin has not yet exited its broader bearish regime.
Final Summary
- The Bitcoin MVRV ratio has not yet fallen below 1.0, which has tended to mark bear market bottoms in previous cycles.
- This time might be different, but the supply in profit and LTH SOPR metrics also pointed to the same thing- the current price bounce comes within a bearish regime.
