Bearish runs are a part and parcel of market cycles but the trick is identifying when the next phase is ready to begin. One way to do so is by gauging the activity of large holders Typically, accumulation from these players during periods of a recession leads to increased prices. When applied to Bitcoin, the current accumulation trend was certainly encouraging.
Looking at Bitcoin’s daily chart, it is clear that the market was amidst a bearish run. The asset has traded between $29K-$32K for the most part of May, down by 54%-58% from its November peak.
Circling back to Bitcoin’s movement during May-July, the cycle was somewhat similar. After falling drastically from $60K, BTC noted a bearish cycle between May-July as prices fell to a low of $30K. Once accumulation kicked in, BTC bounced back from these lows and eventually formed its ATH at around $70K over the next few months.
BTC – Comparing earlier market cycles
So where is the market right now in terms of accumulation? Well, according to CryptoQuant, the current accumulation phase was greater than the one observed back in May 2021. The chart analyzed BTC’s this trend by gauging the unspent transaction output (UTXO) value bands (more than 10K BTC) and Bitcoin’s price. When the metric rises, it is indicative of accumulation among big hands, while a decrease in the metric indicates distribution.
Now, according to CryptoWaunt, the UTXO Count (more than 10K BTC) has soared during the current market cycle and the next major bullish could initiate a possible uptrend heading forward.
Are we close to a market bottom?
Another measure of identifying whether the market would reverse from its current lows is by looking at Bitcoin’s Mayer Multiple, which is a ratio of BTC’s price to its 200-day simple moving average. Historically, a reading below 0.70 has been known to coincide with market reversals.
At press time, the metric had bounced back to 0.74 after slipping to 0.63 last month. Notably, the reading was similar to its July 2021 levels, when Bitcoin had rebounded from the $29K level. Going by this metric alone, BTC had reached a potential bottom and was ready to move on to its next cycle.
Conclusion
Elements such as rising inflation, the COVID 19 pandemic, and Russia’s war on Ukraine have all played a part in Bitcoin’s downcycle. However, with those aspects now priced in, several analysts claim that the ‘pain’ might be coming to an end. Furthermore, the ongoing accumulation paints a favorable narrative and investors could escape the bear market rut sooner rather than later.