Bitcoin, the leading digital currency by market capitalization, recently experienced a large and sudden price correction, which sparked debate among investors.
Concerns have emerged as to whether this decline indicates the conclusion of the current bull cycle or simply represent a temporary obstacle.
While short-term holders face losses, long-term metrics provide a broader view of Bitcoin's trajectory, as analyzed by CryptoQuant's Avocado Onchain in a short period of time. report.
Opportunity Or The End Of The Bull Cycle?
According to Avocado Onchain, the price realized for investors who entered the market during the recent peak of Bitcoin at $98,000 location them in a losing position.
However, for those who invested between one and three months ago, the price realized significantly lower at $71,000, offering a cushion against the current correction.
Avocado pointed out that historical patterns from the 2021 Bitcoin bull cycle show similar changes between record highs and sharp corrections, suggesting that these declines may not signal the end of the cycle. Rather, they have historically been “opportunities” for market rebalancing and subsequent growth.
The main indicator of his analysis is the 30-day moving average of the short term SOPR (Consumption Output Profit Ratio). This metric tracks whether market participants have recently sold at a profit or loss.
The current SOPR data suggests that recent short-term inflows into Bitcoin have not yet resulted in significant profit. Unlike previous cycle peaks characterized by aggressive selling, the ongoing correction appears to be under control, indicating that the market may still have room to move up.
Bitcoin Short Term Decline vs Long Term Trends
Additionally, Avocado Onchain highlights the importance of distinguishing between short-term corrections and broader cyclical trends. Bitcoin trend to rebound after corrections in past bull cycles reinforces the idea that the current decline may not signal the end of the cycle.
These views align with the behavior of long-term holders, who often use corrections to consolidate their positions, strengthening market resilience.
Avocado concluded the analysis, noting:
For investors who have not yet entered the market, this could be a good opportunity to buy Bitcoin at a discount. Instead of succumbing to panic selling during a short-term downturn, adopting a long-term view and a dollar cost averaging (DCA) strategy may be a more effective approach.
At the time of writing, Bitcoin is seeing a gradual increase in its price going up 1.3% in the last 1 hour. Nevertheless, the asset seems to remain in the shadow of the bears as BTC is still down 3.5% in the past day and 10.5% from the high of $108,135 recorded on t – last week.
Featured image created by DALL-E, Chart from TradingView
