Bitcoin’s recent rally and subsequent price correction have been analyzed by cryptocurrency analytics firm CryptoQuant, which has concluded that the bull market remains strong. Despite reaching an all-time high of $99,900 last week and then dropping to around $93,000, Bitcoin is currently undergoing another recovery. According to CryptoQuant, onchain fundamentals indicate that BTC is far from reaching the top of the market.
CryptoQuant’s analysis reveals that Bitcoin’s realized price valuation has set an upper target of $146,000, historically marking the peak of Bitcoin cycles as seen in January 2021 and April-May 2021. The firm notes that Bitcoin still has room to grow before reaching overvalued levels that typically precede the end of a bull cycle. One key indicator of the market’s top is the activity of new Bitcoin investors, with the value held by new investors currently accounting for just over 50% of the total money invested in Bitcoin. This is significantly lower than previous cycles when new investors held 90% and 80% of the total value, respectively.
Previous market peaks have been characterized by high individual activity, which is currently absent in the current market. While individual investors have reduced their Bitcoin holdings by 41,000 BTC since October, large investors have increased their holdings by 130,000 BTC during the same period. CryptoQuant notes that previous bull cycles ended when retail investors were buying aggressively, whereas retail activity remains subdued now.
The Bull-Bear Market Cycle Indicator, a tool used by CryptoQuant, remains concentrated in the “BULL” phase but has not yet reached the “EXTREME BULL” phase, which historically signals the end of bull markets. The indicator is still far from the level seen in March 2024 when Bitcoin surpassed $70,000. While the broader outlook remains bullish, CryptoQuant has identified a potential short-term hurdle in MicroStrategy’s stock price, which has surged 113% since November 3. The stock price is currently nearing the upper end of its valuation bands, indicating a potential correction that could indirectly impact Bitcoin’s momentum.
In conclusion, CryptoQuant’s analysis suggests that the current bull market for Bitcoin remains strong and has room for further growth before reaching overvalued levels that typically precede the end of a cycle. The lack of aggressive buying from retail investors and the absence of high individual activity in the market are key differences from previous market peaks. While the broader market outlook points to continued bullish momentum, potential short-term hurdles such as MicroStrategy’s stock price overheating could impact Bitcoin’s near-term performance. As always, this information is not investment advice and individuals should conduct their own research before making any financial decisions.
