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Bitcoin (BTC) on-chain indicators have dropped to levels seen at the bottom of past cycles. While the price decline has been limited compared to previous bear markets, an analysis suggests a different pattern from the traditional 4-year cycle has emerged, as long-term holders refuse to sell.
According to crypto media outlet BeInCrypto on May 7, Bitcoin's on-chain indicators showed deep undervaluation signals observed at recent cycle bottoms. Bitcoin has fallen about 40% from its all-time high, but this is far from the 75% to 85% crash that defined past bear markets.
BeInCrypto analyzed that six key indicators are pointing in the same direction. The market has undergone a reset phase without an overheating peak, and long-term holders have not engaged in large-scale selling. The Mayer Multiple Z-score, an indicator comparing Bitcoin's price to its 200-day moving average, recently dropped to approximately minus 1.5 standard deviations. This range has only appeared twice in recent history: first in March 2020 at around $3,000, and second in late 2022 during the FTX collapse at around $19,000. This signal occurred around $62,000, after which Bitcoin recovered to around $80,000.
The Sharpe Ratio also supported this trend. The indicator moved into a low-risk zone, a range also observed at cycle bottoms in 2015, 2019, and 2022. The proportion of supply in a loss state also rose to approximately 39%, according to InTheCryptoVerse data. This level has historically appeared in the latter stages of bear markets.
The 200-week moving average was also presented as an additional confirmation signal. Bitcoin's 200-week moving average has served as a bottom in all past cycles. It temporarily broke below it in 2018, and intraday drops occurred in 2020 and 2022. This time, after confirming the 200-week moving average, it maintained support without a clear deviation.
However, this cycle lacked the usual overheating peak. The CBBI Bitcoin Bull Run Index, which combines several cycle indicators, reached an overheated zone above 80 in the bull markets of 2013, 2017, and 2021. This cycle did not reach that zone. Glassnode's Net Unrealized Profit/Loss (NUPL) indicator showed a similar trend. The expansion phase from 2024 to 2026 did not reach the blue overheated zone, which signifies widespread greed, but instead formed a peak in the green "belief" zone.
The most unusual signal came from the behavior of long-term holders. Glassnode classifies wallets holding coins for at least 155 days as long-term holders. In past cycles, long-term holders offloaded large quantities into the market near peaks, a pattern repeated in 2014, 2018, and 2021. However, in this cycle, the supply held by long-term holders slightly decreased in 2024 but then recovered to an all-time high of over 14.5 million BTC.
BeInCrypto suggested that long-term holders might still be waiting for higher peaks, or that the composition of long-term holders has changed due to the inclusion of exchange-traded funds (ETFs), cold storage, national holdings, and corporate treasury assets. At the same time, it pointed out that it is rare for bottom signals from price derivative indicators, the absence of overheating in sentiment indicators, and the absence of long-term holder selling to occur simultaneously. The current on-chain trend is considered the most consistent bottom signal Bitcoin has produced in recent years.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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