Bitcoin (BTC) Market Cycle Indicator is Again in BEAR Phase (Light Blue Area)

Bitcoin [BTC], the world's largest cryptocurrency by market capitalization, has seen considerable depreciation over the past week.

Bitcoin [BTC] has had an interesting month. After dropping to as low as $49,500 on the charts earlier in August, the world’s largest cryptocurrency recovered quickly. Later, it hit a local high of over $65k, before losing its gains again to drop below $60k. Now, as the month nears its end, BTC was seen trading at a value of $59,129, down by over 7%.

Now, while BTC dropped significantly earlier this month, many are still uncertain about the scale of the next wave of corrections. In fact, several analysts have differing opinions on the matter. However, one analysis suggested that Bitcoin may register a strong decline if the price declines below $56k.

Bitcoin’s bear phase

In his analysis, Cryptoquant analyst Julio Moreno highlighted the market cycle indicator, which showed $56k to be the crucial support level. According to the analyst, if the price falls below this level, the crypto will seen significant weakness.

Since the Bitcoin market cycle indicator has turned bearish again, the crypto risks further correction below the demand zone.

Moreno shared the analysis on X, noting that,

“#Bitcoin market cycle indicator is again in BEAR phase (light blue area). From a valuation perspective, if the price pierces $56K to the downside, risks of a larger correction increase.”

If the bulls don’t reclaim the market, the Bear phase is bound to persist.

Other market indicators

While these metrics highlighted by Moreno suggest possible future price movements, it’s essential to see what other market indicators have to say about the matter at hand.

To begin with, Bitcoin’s NUPL has declined over the past 7 days. In fact, the metric shifted from a value of 0.5 to 0.4. This highlighted a movement from investors’ realized unrealized profit to a realized unrealized loss.

This is a sign that the market may be leaning bearish. By extension, this means investors are worrying about the sustainability of the current prices, which may result in selling pressure.

Furthermore, BTC is reporting a negative adjusted price DAA divergence of -44.31.

This suggests a decline in on-chain activity based on current prices. Such market conditions result in correction as prices adjust to the lower level of on-chain activity.

Finally, the MVRV ratio for BTC has remained at 1.8 over the past week. This shows that participants are in profit, which could lead to selling pressure as they aim to realize those gains. Therefore, if BTC holders decide to sell at this rate to realize their profits, it would lead to further price correction.

If selling pressure increases, the market will experience a pullback.

Therefore, as the Cryptoquant analyst suggests, BTC is in the bear phase. If the current market conditions hold, Bitcoin may be positioned for a bigger correction. A pullback below the $56 level will see BTC fall below $50k to the critical support of $49k.