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Is the Bitcoin Bull Market Over Pre-Halving?

Bitcoin's recent drop below $60,000 has sparked concerns about the longevity of its impressive bull run this year
April 21, 2024

Bitcoin's recent price drop below $60,000 has sparked speculation about the future of its impressive bull run this year. But according to lead Glassnode analyst James Check, the bulls need not worry just yet.

In a recent video analysis, Check delved into various on-chain metrics related to short-term Bitcoin holders, those who acquired their coins less than five months ago.

One significant metric is Bitcoin’s short-term holder MVRV ratio, which is now nearing 1.0. This indicates that the asset's unrealized profit and loss have reached a break-even point. Historically, this level has served as support after a bull market dip, but also as major resistance during bear markets when most Bitcoin holders are underwater.

Check commented, “Little undercuts are good. In 2023 we had several of these retests. If we assume this is a resilient uptrend, we should expect the short-term holder cost basis to hold, somewhere in that $58,000 to $59,000 region.”

Similarly, the short-term holder SOPR (Spent Output Profit Ratio) has recently dipped below 1.0, suggesting that short-term holders are realizing more losses than profits. A sustained dip below this level could signal a prolonged bear market.

Recent data indicates that short-term holders have seen a significant spike in realized losses, likely due to panic selling prompted by escalating tensions between Iran and Israel.

"This is essentially what you do want to see, as a contrarian," Check added. "As a contrarian, you kind of want to see people doing the wrong thing at the wrong time."

Check had previously noted that Bitcoin’s price could become "top-heavy" if it drops below $58,800. At the time of writing, Bitcoin is trading at $64,000.

Despite short-term fluctuations, metrics like the AVIV momentum indicator suggest that Bitcoin's price momentum remains positive on longer time frames. According to Check, the recent cooling-off period on the 30-day timeframe is merely a "proper reset."

Regarding the Bitcoin halving, Check believes its financial impact may be overhyped. He points out that compared to Bitcoin futures volume, spot volume, and ETF trade volume, the daily BTC issued to miners is a tiny fraction of the market.

“The size of the halving is a narrative game more than it is in terms of size now… it’s just very, very small,” he said.

While Bitcoin's recent dip may have raised concerns among investors, James Check's analysis suggests that the current market correction could be a normal part of the cryptocurrency's volatile nature. Despite short-term fluctuations, the long-term momentum remains positive, indicating that Bitcoin's bull run may not be over just yet.

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