|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cryptocurrency News Articles
Bitcoin Market Experiences Corrective Phase, but 'Euphoria' Sentiment Remains
May 03, 2024 at 05:46 am
During the correction phase, the Bitcoin market has decreased in intensity while remaining in the Euphoria phase based on the Bitcoin's NUPL. After hitting a new high of $73,000 in March, the market shifted towards distribution as coins capitalized on liquidity. The Crypto Fear & Greed Index displayed neutral signals, fluctuating from extreme greed to fear. Net Unrealized Pain & Loss cycles (NUPL) measured market sentiment, indicating the Euphoria phase for the current bull market. The Bitcoin price cycle experienced corrections, with short-term holders and recent buyers influencing market sentiment and spending patterns. The MVRV ratio gauged deviations during corrections, showing typical drops of 0% to -10% below the average cost basis of short-term investors.
Bitcoin Market Navigating a Corrective Phase, But Euphoria Persists
Amidst the recent price consolidation and volatility in the cryptocurrency market, Bitcoin (BTC) continues to exhibit characteristics of the "Euphoria" phase of a bull market, according to various market indicators. However, the intensity of this euphoria has waned as the market undergoes a correction.
Following an all-time high of $73,000 reached in March, Bitcoin has shifted towards a broader distribution phase, as coins are sold into liquidity and increasing demand. This has resulted in a drawdown in BTC price, which has been hovering around the $60,000 range.
The surge in sell-side pressure is evident in the increase in BTC net outflows observed in April. This indicates a consistent pressure from investors who are bringing dormant supply back into the market to cater to the inflowing demand at new highs.
Complementing this trend, the Crypto Fear & Greed Index, a measure of market sentiment, has recently signaled neutral levels, indicating a shift away from the extreme greed observed during the March rally. The index reached a high of 89.12 in mid-March when BTC was trading around $73,000.
To better understand the market dynamics, it is important to delve into the concept of Net Unrealized Profit/Loss (NUPL), which measures the magnitude of net paper profits (or losses) held by the market, normalized by market capitalization.
NUPL plays a crucial role in identifying the Euphoria phase of a bull market, where unrealized profits surpass more than half of the market capitalization size (NUPL > 0.5). In the previous bull cycle (2020-21), this phase began 8.5 months after the Bitcoin halving and lasted for approximately 10.5 months.
In the current cycle, NUPL breached 0.5 about 6.5 months before the halving, indicating the significant impact of US Spot Exchange-Traded Funds (ETFs) in accelerating price action by introducing substantial demand. According to this metric, the Euphoria phase has persisted for the past seven months.
However, even during sustained uptrends, corrections can provide valuable insights into investor sentiment. To evaluate the dominance of short-term holders or recent buyers during these corrective phases, analysts often examine the Realized Loss breakdown metric.
The Realized Loss charts indicate a higher frequency of selling among younger age groups, particularly those holding coins for 1-3 months (1m-3m) and 3-6 months (3m-6m). This suggests that these cohorts are more influenced by short-term price fluctuations and tend to sell during market downturns.
Meanwhile, the 1w-1m cost basis, which represents the average cost basis of coins held by short-term holders, can help identify market inflection points and potential local bottoms (in bull markets).
During bull market corrections, short-term holders may increase their selling as the market declines. However, as the market price approaches each subcohort's cost basis, the pace of selling is likely to slow down due to seller exhaustion.
The 1 week -1 month realized price (cost basis) chart can help identify potential points of seller exhaustion in the near term. It serves as a valuable tool for traders and investors in determining when the pace of spending among short-term holders may slow down.
The Market Value to Realized Value (MVRV) ratio provides another perspective on corrections during bull markets. The MVRV (1w-1m) ratio typically decreases to a range of 0.9-1 during pullbacks, implying that the market usually drops by 0% to -10% below the 1w-1m investors' average cost basis.
By assessing the implied pressure on 1w-1m investors, it is possible to gauge the intensity of their panic and fear, which is reflected in the realized loss. Identifying periods of aggressive selling pressure by this group can help provide insights into market sentiment.
Furthermore, the realized loss for 1w-1m old entities, denominated in USD, can assist in determining intervals of high-loss realization. This information, when analyzed using statistical methods, such as identifying values greater than one standard deviation, can help identify potential market lows, as recent buyers tend to panic sell during these periods.
In summary, while the Bitcoin market experiences consolidation after reaching all-time highs, the euphoria phase continues, characterized by high net outflows and unrealized profits. The analysis of various market indicators provides valuable insights into investor sentiment and the potential for short-term corrections. By understanding these dynamics, investors can navigate the market with increased clarity and make informed trading decisions.
Disclaimer:info@kdj.com
The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!
If you believe that the content used on this website infringes your copyright, please contact us immediately (info@kdj.com) and we will delete it promptly.
-
- Altcoins Set to Explode: Crypto Analysts Predict Record Highs in 2024
- May 17, 2024 at 03:19 pm
- Altcoins Poised for Explosive Growth: Crypto Analysts Predict ATHs in 2024 As the cryptocurrency market exhibits optimistic indications of a sustained
-
- Embrace Meme Coins: Diversify Your Crypto Holdings with Bonk and Raboo
- May 17, 2024 at 03:19 pm
- Embrace the Meme Coin Revolution: Diversify Your Crypto Portfolio with Bonk and Raboo In the ever-evolving crypto landscape, where volatility reigns s
-
- Three Cryptocurrencies Poised for Takeoff: Toncoin, Render, and Algotech
- May 17, 2024 at 03:17 pm
- Toncoin, Render, and Algotech: The Crypto Trifecta Set to Soar In the ever-evolving crypto market, where fortunes are made and lost with lightning spe
-
- AI Cryptos Lead Surge in Crypto Market: Render, Bittensor, and Raboo Dominate
- May 17, 2024 at 03:14 pm
- The Rise of AI Cryptos: Render, Bittensor, and Raboo Lead the Charge The cryptocurrency market is experiencing a resurgence in 2024, with a particular
-
- Furrever Token Aims to Rival Success of Crypto Giants, Channeling Cuteness and Engagement
- May 17, 2024 at 03:14 pm
- Furrever Token: Poised to Emerge as a Crypto Giant, Rivaling the Success of XRP, Cardano, and Polygon In the ever-evolving digital asset landscape, a
-
- Shiba Inu and Dogwifhat Soar as Meme Coin Adoption Expands
- May 17, 2024 at 03:05 pm
- Shiba Inu and Dogwifhat Surge Amidst Wider Meme Coin Adoption Integration with Global Payment Service Shiba Inu (SHIB), the second-largest meme coin b
-
- USD Index Key to Bitcoin's Potential 127% Surge, Says Analyst
- May 17, 2024 at 03:04 pm
- US Dollar Index Holds Key to Bitcoin Price Surge, Analyst Predicts 127% Rally Acclaimed financial analyst Jamie Coutts from Real Vision has asserted t
-
- CoinGeek AMA Highlights Blockchain Innovations Ahead of London Conference
- May 17, 2024 at 03:03 pm
- CoinGeek Weekly Livestream AMA Explores Blockchain Advancements as London Blockchain Conference Nears In anticipation of the London Blockchain Confere
-
- Chainlink Poised for Surge as Technical Analysis Reveals Bullish Momentum
- May 17, 2024 at 03:02 pm
- Chainlink Poised for a Surge, Technical Analysis Reveals Strong Bullish Momentum NEW DELHI, India (CoinChapter.com) - Chainlink (LINK), the leading pr