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Bitcoin (BTC) on-chain indicators have dropped to levels seen during past cycle bottoms. While the price drop is limited compared to previous bear markets, an analysis suggests a different trend from the traditional 4-year cycle pattern, as long-term holders are refusing to sell.
According to the cryptocurrency specialized media BeInCrypto on May 7, Bitcoin's on-chain indicators showed deep undervaluation signals observed at recent cycle bottoms. Bitcoin has fallen by about 40% from its all-time high, but this is far from the 75% to 85% crash levels that defined past bear markets.
BeInCrypto analyzed that six key indicators are pointing in the same direction. The market went through a reset phase without an overheated peak, and long-term holders did not engage in large-scale selling. The Mayer Multiple Z-score, an indicator comparing Bitcoin's price to its 200-day moving average, recently dropped to approximately minus 1.5 standard deviations. This range has only appeared twice in recent history: first in March 2020 at around $3,000, and second at the end of 2022 during the FTX collapse at around $19,000. This signal occurred near $62,000, after which Bitcoin recovered to around $80,000.
The Sharpe Ratio also supported this trend. This indicator moved into a low-risk zone, a range also observed at cycle bottoms in 2015, 2019, and 2022. The proportion of supply in a loss state also rose to about 39% according to data from InTheCryptoverse. This level has historically appeared in the latter half of bear markets.
The 200-week moving average was also presented as an additional confirmation signal. Bitcoin's 200-week moving average has served as a bottom in all past cycles. It temporarily deviated in 2018, and intra-day dips occurred in 2020 and 2022. This time, after confirming the 200-week moving average, support was maintained without significant deviation.
However, this cycle did not have a typical overheating peak. The CBBI Bitcoin Bull Run Index, which combines several cycle indicators, reached an overheated zone above 80 in the bull runs of 2013, 2017, and 2021. This cycle did not reach that zone. Glassnode's Net Unrealized Profit/Loss (NUPL) indicator showed a similar trend. The expansion phase from 2024 to 2026 did not reach the blue overheated zone, which signifies public greed, but instead formed a peak in the green "belief" zone.
The most unusual signal came from the behavior of long-term holders. Glassnode classifies wallets holding coins for at least 155 days as long-term holders. In past cycles, long-term holders offloaded large quantities onto the market near peaks, and the same pattern repeated in 2014, 2018, and 2021. However, in this cycle, the supply held by long-term holders slightly decreased in 2024 but then recovered to an all-time high of over 14.5 million BTC.
BeInCrypto suggested that long-term holders might still be waiting for higher peaks, or that the composition of long-term holders may have changed due to the inclusion of exchange-traded fund cold storage, national holdings, and corporate treasury assets. At the same time, it noted that it is rare for bottom signals from price derivative indicators, the absence of overheating in sentiment indicators, and the absence of selling by long-term holders to appear simultaneously. The current on-chain trend is considered the most consistent bottom signal Bitcoin has produced in recent years.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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