The market for crypto assets in general is actually not doing well, and this is one of the reasons why Bitcoin (BTC) is coming. Although investors who invest in any crypto asset expect an ‘improvement’ in the near future, unfortunately, there does not appear to be any concrete reason to realize this recovery at the moment.
Could Bitcoin (BTC) have entered a bear market?
Bitcoin, the leading name in crypto assets, lost another 5.45% yesterday, bringing the monthly value decrease up to 19%, so investors and analysts can no longer ignore the risk of a ‘bear market’. For this reason, it is very important to look at the status of on-chain metrics and determine what position to take for the future.
For the past five months, the short-term holders (SOPR) at the ’30-day moving average’ continued to hold their position above the neutral line. Even with the declines in September and November, investors were still making profits.
That changed as SOPR fell below 1 this month, a key indicator that profit sentiment is now turning into losses.
Similarly, the P/Los ratio fell below 1; This represents a relatively rare case, given that the indicator has mostly retested the neutral zone and has never crossed since last year, except for the May crash.
However, it would be wrong to say that all metrics paint a negative picture, as some metrics paint a slightly higher picture.
The supply shock rate, for example, continues to trend upward, meaning that Bitcoin continues to shift to organizations with less spending history.
This also indicates that only the supply side is currently locked in as demand continues to rise.
So, if this divergence occurs, we could see the price action go up again. That would bring us back to the critical $53,000 zone.
Reclaiming this would be a positive sign for Bitcoin as it is the level at which not only the STH (short-term investors) cost base is located, but also the $1 trillion market cap of BTC.
Therefore, if the cost basis is revived, crypto assets may be on the rise, otherwise it would be wise to maintain a cautious stance. Of course, all investors should keep a close eye on these metrics, whether they invest in BTC or not, as crypto assets that are still heavily dependent on Bitcoin will still remain tied to Bitcoin’s price movements.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.