Bitcoin is currently in the “Bear To Bull” transition period.
Data from Glassnode suggests that Bitcoin is currently in the transition period from the bear market to the bull market.
Bitcoin price-bid-earnings correlation has recently been below 0.75
According to a recent report from Glassnode, the BTC correlation between the price and the offer in profit generally observes several drops below 0.75 during transitional periods.
“Supply in Profit” is an indicator that measures the percentage of the total Bitcoin supply that has some surplus right now.
The calculation works by looking at the chain of each coin to see what price it was last moved to. If this previous sale price is less than the current BTC value of any coin, then that coin currently has some unrealized profit.
The correlation between the crypto price and its offer in profit tells us whether the two metrics have moved in the same direction or not.
Now, here is a chart showing the trend of this Bitcoin correlation over crypto history:
The value of the metric has been low multiple times in recent days | Source: Glassnode's Market Pulse
When the correlation is positive, it means that the price and the offer in profit are both moving in the same direction. On the other hand, negative values suggest that they go in opposite directions.
As you can see in the graph above, Bitcoin has historically held values above 0.9 for most of the time during each of the previous price cycles.
However, during periods of transition between bull markets and bear markets (as well as vice versa), the indicator usually observes several drops below 0.75.
According to the report, these deviations occur during bear-to-bull transitions, because sellers become exhausted in the late bear market stages while the remaining investors become reluctant to move their money out of frustration, thus reducing the correlation between price and supply in profit. .
And during the opposite transitions, the supply in profit generally rises to almost 100% (as the price rises to a new ATH), thereby reducing any correlation with the price.
Recently, the indicator has observed several drops below the 0.75 threshold, suggesting that Bitcoin is currently in the historical transition zone from bear to bull.
BTC price
At the time of writing, Bitcoin’s price is hovering around $19.1k, down 4% in the last seven days. Over the past month, the crypto has lost 10% in value.
The chart below shows the BTC price trend over the past five days.
Looks like the value of the crypto hasn't shown much movement in the past few days | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com
