The cryptocurrency market, led by Bitcoin, has often followed a pattern of alternating growth and decline cycles, reflecting investor sentiment and market fundamentals.
Since the beginning of the current bull cycle in January 2023, Bitcoin has shown significant gains in price and market duration. Increased capital inflows from new investors have supported this growth and existing partners are reinvesting their profits.
However, recent signs suggest that the market may now be entering the final stages of this cycle, raising questions about what lies ahead for Bitcoin and its 'broader crypto market.
Related Reading
Key indicators point to cautious optimism
An important metric that supports this observation is the percentage of Bitcoin that has been traded within the past month based on a realized market cap – UTXO, which is currently at 36%, according to a recent report. analysis shared by a CryptoQuant analyst called Crypto Dan.
In the analysis, Dan points out that although this figure is still below peak levels seen in previous bull ringsits downtrend indicates that the market is “moving towards the top of the cycle. “
Dan predicts that this peak could occur sometime between Q1 and Q2 of 2025. However, rather than one explosive increase, historical trends indicate that the ratio could see two to four more sharp increases before the cycle comes to an end. end
This pattern usually indicates an overheating market, followed by a corrective or bear cycle. Dan also pointed out that the market was still there is potential to wina conservative approach to risk management is advisable.
Historically, bull cycles at the end of the phase are characterized by increased volatility, as profit taking begins to influence market behavior. Dan wrote:
Nevertheless, from a conservative point of view and with risk management in mind, caution is recommended. For this reason, I intend to gradually sell my holdings.
Another critical insight from on-chain data is the relationship between short-term traders and long-term holders. Historically, a sharp increase in short-term trading activity often ahead of a market correction.
Traders who entered the market during recent price rallies may begin to sell their holdings, leading to temporary downward pressure on prices. On the other hand, long-term holders often remain resilient during these periods, providing sustained market strength.
Bitcoin is seeing a revival as the New Year begins
After weeks of struggling and staying below $100,000 in the last month of 2024, Bitcoin now seems to have started again. bullish momentum as the first month of 2025 begins.
Although BTC entered the new year with a price below $95,000. However, a few days later, the asset continued to move up, regaining the $100,000 price mark to trade at the current price. $101,624.
At the time of writing, BTC recorded a 3.9% increase in the past day bringing its price closer to the high level recently established above $108,000 last month.
Featured image created by DALL-E, Chart from TradingView
