 ▲ Bitcoin Bull Market |
There is a forecast that Bitcoin’s (BTC) transition into a bull market hinges on the capitulation of long-term holders.
According to cryptocurrency media outlet CryptoPotato on February 16 (local time), Bitcoin is currently facing downward pressure without a clear directional trend. On-chain data shows that a rally typically begins only after long-term investors absorb unrealized losses and selling pressure is exhausted. Amid growing short-term uncertainty in the market, experts are closely monitoring changes in specific indicators.
João Wedson, co-founder of Alphractal, emphasized changes in long-term holder metrics. The current Net Unrealized Profit/Loss (NUPL) for long-term holders stands at 0.36, indicating they remain in profit. Historically, Bitcoin bull cycles have begun when this figure turned negative.
Once the indicator moves into negative territory, even long-term investors are holding losses. This phenomenon aligns with extreme market pessimism. In past cycles, this phase signaled complete seller capitulation, a process in which assets are redistributed to stronger hands. The dawn of a bull market emerges only when the market is deeply depressed.
Valuation indicators are sending similar signals. According to CryptoQuant, the Market Value to Realized Value (MVRV) ratio has entered an accumulation zone for the first time in four years. This is the first occurrence since May 2022, when Bitcoin plunged about 50% from $30,000 to $15,000. The current accumulation zone refers to levels at or below 1.44.
While periods of low MVRV ratios carry higher short-term downside risks, they are favorable for accumulation. The current Bitcoin market appears to be undergoing a cleansing process as speculative excess is flushed out. This may represent a harsh phase of building momentum for long-term growth. Investors should closely watch whether key indicators breach critical thresholds and formulate their strategies accordingly.
*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses incurred based on it. The content should be interpreted solely for informational purposes.*