Bitcoin Price Drops Below $98,000 Amid Market Correction
Bitcoin, the leading cryptocurrency by market capitalization, has recently experienced a significant price correction, leading to discussions among investors. Concerns have arisen regarding whether this downturn indicates the conclusion of the current bull cycle or is merely a temporary setback.
Short-term holders face losses; however, long-term metrics offer a broader perspective on Bitcoin’s trajectory, as analyzed by CryptoQuant’s Avocado Onchain in a recent report.
Opportunity Or End of The Bull Cycle?
Avocado Onchain states that the realized price for investors who entered the market during Bitcoin’s recent peak at $98,000 places them in a loss-making position. In contrast, those who invested one to three months ago have a realized price of $71,000, providing a cushion against the current correction.
Historical patterns from Bitcoin’s 2021 bull cycle show similar alternations between record highs and sharp corrections, suggesting these dips may not necessarily indicate the end of the cycle. Instead, they often serve as opportunities for market rebalancing and subsequent growth.
A key indicator analyzed is the 30-day moving average of the short-term SOPR (Spent Output Profit Ratio), which tracks whether recent market participants are selling at a profit or a loss. Current SOPR data shows that recent short-term inflows into Bitcoin have not resulted in substantial profit-taking. Unlike previous cycle peaks characterized by aggressive selling, the ongoing correction appears subdued, suggesting potential for upward movement.
Bitcoin Short-Term Dips vs. Long-Term Trends
Avocado Onchain emphasizes the importance of differentiating between short-term corrections and broader cycle trends. Bitcoin’s historical tendency to rebound after corrections reinforces the idea that the current downturn may not signify the cycle’s end. Long-term holders often use corrections to consolidate their positions, contributing to market resilience.
Avocado concluded the analysis by noting that for investors yet to enter the market, this may present an opportunity to buy Bitcoin at a discount. Rather than engaging in panic selling during short-term downturns, adopting a long-term perspective and a dollar-cost averaging strategy could be more effective.
Currently, Bitcoin is gradually rebounding, seeing a price increase of 1.3% in the past hour. However, it remains down by 3.5% over the past day and 10.5% from its peak of $108,135 recorded last week.
Featured image created with DALL-E, Chart from TradingView