Bitcoin is in downtrend according to on-chain metrics, but at the same time we might be close to the end of the bearish market
According to the Long-Term Holder Spent Price vs. Cost Basis indicator, most investors continue to capitulate as the gap between the buy price and the sell price increases steadily. The current capitulation may be the greatest distribution on the market.
Rising capitulation among long-term holders could have been a worrying sign back when Bitcoin was trading at the top, but in the event of a prolonged rangebound movement, we are less likely to see the negative effect of a relatively large selling volume.
Glassnode’s report also included an overview of additional indicators, including realized profit and loss in the cryptocurrency market, which shows us the average USD value at which investors can enter and exit the market. The metric allows us to identify specific market phases: bearish, bullish and disbelieving.
According to the metric, the crypto market currently remains in a bearish phase since losses are largely outpacing realized profits. But while Realized Profit and Loss can give us a hint about current market conditions, we can also see the length of each cycle on the market. The period between 2016 and 2019 included three full cycles, while the same number of cycles was pushed in only a two-year period between 2020 and 2022.
Nearly all on-chain fundamental metrics suggest the cryptocurrency market is moving in a bearish state as most investors capitulate, retail traders are at a loss, and profitability for long-term holders remains weak.
But since on-chain metrics turned bearish during Bitcoin’s third month of downward movement, the market may be close to a reversal as every cycle on it became significantly shorter compared to bullish and bearish cycles between 2016 and 2019.
