The latest edition of Capriole Investments’ “Bitcoin Update” by Charles Edwards, founder, and CEO, delves into the current state of Bitcoin by analyzing thirteen on-chain indicators to determine if the Bitcoin cycle top is in sight. After a significant technical breakout above $65.5K, Bitcoin experienced a sharp reversal, indicating a possible cycle top. Edwards notes that this pattern, where Bitcoin fails to print new highs after breaking an all-time high, is a sign of market weakness.
The on-chain data analysis conducted by Edwards covers a range of metrics that provide insight into the state of the market. Metrics such as Supply Delta, Long-term Holder Inflation Rate, Hodler Growth Rate, and Bitcoin Heater all point towards a bearish outlook, indicating potential market downturns. Other metrics like Dynamic Range NVT, On-chain Transaction Fees, Net Unrealized Profit/Loss (NUPL), Spent Volume 7-10 years, SLRV Ribbons, Dormancy Flow, Percent Addresses in Profit, Mayer Multiple, and US Liquidity also contribute to the overall bearish sentiment.
Out of the thirteen metrics analyzed, eight are currently bearish, five are neutral, and none are bullish. This prevalence of bearish indicators suggests that the cycle top for Bitcoin could be near, marking a potential turning point for the cryptocurrency. However, Edwards highlights the importance of considering technical patterns and broader market behavior in conjunction with on-chain data. Bitcoin’s price remains above the $58K support level, and the potential formation of a Wyckoff Accumulation pattern on the daily chart indicates that there may still be some bullish potential in the market.
While the on-chain metrics lean towards a bearish outlook, Edwards suggests cautious optimism and vigilant risk management. He acknowledges the ambiguity in the signals, with fundamentals appearing bearish while technicals still have a bullish skew. Edwards speculates that the current bearish top signals could be a result of typical summer months inactivity or a potential shift in the market cycle. Despite the uncertainties, Edwards trusts his gut feeling that the negative on-chain activity for Bitcoin may be temporary, and the cryptocurrency could see a resurgence in risk-adjusted returns post-Halving in the fourth quarter and beyond.
Ultimately, the analysis conducted by Charles Edwards paints a mixed picture for Bitcoin, with on-chain metrics indicating a potential cycle top while technical patterns and broader market behavior suggest some bullish potential. As Bitcoin continues to trade at $62,747, investors and traders are advised to exercise caution, monitor the market closely, and stay informed about the evolving dynamics within the cryptocurrency space. Whether Bitcoin is on the brink of a significant market shift or experiencing a temporary lull remains to be seen, but staying informed and adaptable will be crucial in navigating the current landscape.
