Bitcoin, thought it was an uptrend but a 'dead cat bounce'?..."On-chain indicators point to a bear market"

▲ Bitcoin (BTC)

Bitcoin (BTC) has recently rebounded, raising market expectations. However, on-chain indicators still suggest that it is a temporary rebound within a bear market.

Crypto-specialized media NewsBTC reported on April 21 (local time), citing data from Maartunn, an analyst at virtual asset analytics firm CryptoQuant, that the current recovery in Bitcoin is likely a dead cat bounce, a technical rebound. After hitting a low in early February, Bitcoin traded sideways in a box range before recently gaining momentum, but is now searching for direction as accumulation signals from long-term holders and selling pressure from short-term investors are in a tight standoff.

Maartunn highlighted changes in the supply from long-term holders, who are a key driving force of the Bitcoin network. The holdings of long-term holders, who have held assets for more than 155 days, increased by approximately 345,000 BTC in the past month, forming a structural bullish foundation beneath the surface. The increase in Bitcoin holdings suggests that the distribution process observed during past bear markets has ended, and a strong will to hold is re-emerging.

The contrasting movements of short-term investors are a major factor increasing downward pressure on the market. Short-term investors, who have held for less than 155 days, have deposited approximately 60,000 BTC to exchanges, either to take profits or cut losses, utilizing the recent rebound opportunity. The fact that many of them are leaving the market even while incurring losses indicates that the current rebound has not fully restored investor sentiment. Large whales holding over 100 BTC in their wallets are also increasing inflows to exchanges, forming a potential sell wall.

Bitcoin surpassed $78,000 last week, raising expectations for new all-time highs, but soon retreated to around $75,300, increasing volatility. Maartunn diagnosed the movements so far as a typical rebound within a bear market and advised maintaining a conservative stance until a strong upward breakout occurs. Despite consistent accumulation by institutions like Strategy, panic selling by retail investors and profit-taking by whales are suppressing price increases.

The virtual asset market continues a precarious tightrope walk between long-term fundamental improvements and short-term supply-demand imbalances. While the increasing proportion of long-term holders is a positive sign, sustained price increases are unlikely until short-term selling pressure is resolved. For Bitcoin to enter a true bull market, strong trading volume that decisively overcomes current resistance levels must accompany it.

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