On-chain Bitcoin calculations suggest that the bottom is not in
Legacy finance defines a bear market as a period of prolonged price decline in which the asset price falls by 20% or more from recent peaks.
There is no standardized definition of a crypto bear market. However, given that digital assets are much more volatile, it is argued that the percentage drop, by which a crypto bear market is determined, should be -40%, perhaps -60%.
Nonetheless, with the market down roughly 74% from its ten-month peak, there is no doubt that the crypto bear is here for Bitcoin.
On June 18, BTC posted a local low of $17,700, marking a close below the previous cycle high for the first time in history. Some analysts called this the bottom of the market cycle. However, analysis of several metrics on the chain suggests otherwise.
Percentage of Bitcoin addresses in profit
The percentage of Bitcoin addresses in profit refers to the proportion of unique addresses whose funds have an average purchase price lower than the current price.
In this case, the “purchase price” is defined as the price at the time of token transfer to an address.
During each previous cycle trough, 50% or fewer Bitcoin addresses have been lost. The chart below shows a current reading of around 58%, suggesting that the BTC price must fall further.
Market value to realized value
Market value to realized value (MVRV) refers to the ratio of market value (or market value) to realized cap (or stored value). By gathering this information, MVRV indicates when the Bitcoin price is trading above or below its “real value”.
At the same time, by comparing long-term and short-term MVRV, it is possible to measure the capitulation of long-term holders.
Long-term Holder MVRV (LTH-MVRV) only considers unused transaction outputs with a lifetime of at least 155 days. It serves as an indicator to assess the behavior of long-term investors.
The last four cycle lows were marked by a convergence of the STH-MVRV and LTH-MVRV lines. Such a cross has yet to take place, suggesting that long-term holders must capitulate to short-term holders.
Contribution in profit/loss
Supply in Profit and Loss (SPL) examines the circulating supply in profit and loss. In other words, it looks at the number of tokens whose price was lower or higher than the current price when they last moved.
Like the previous two examples, the bottom of previous cycles was in when the profit and loss lines converged. Currently, the profit line has not yet converged towards the loss line.
