Bitcoin’s price is at a critical level after it fell sharply to the zone of $112,000 and investors are panicking. Investors fear the market could be entering a bearish phase. Following weeks of tight consolidation the sudden fall has caused investors to worry about a more serious correction.
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But not all analysts raise the alarm. Axel Adler is a leading analyst who believes that, while the bull market may be in its late stages of development, the general upward trend remains. Adler notes that, as bull markets age, investors’ risk appetite decreases naturally, leading to an increase in profit-taking, and short-term pressure. The temporary downturns are not indicative of a trend change.
LTHs remain profitable and do not show any signs of capitulation. Bitcoin continues to be supported by their strong conviction. In bull markets, this is the normal phase where there are short-term fluctuations. volatility Shake out the weaker hand before continuing.
The Harmonic Mean for NuPL and MVRV Cycles
Adler believes that the Bitcoin Harmonic is a new phenomenon. Mean The combination of MVRV and NUPL (Market Value/Unrealized Loss) shows a shift in behavior by investors as the bull market matures. Adler’s data indicates that between March 2024 and December 2024 this combined metric reached a peak of over 1.9. This marked periods where market confidence was high, with investors continuing to hold despite increased profit margins.
The readings currently show a notable decline. In fact, the harmonic average has a much lower peak. This indicates that more holders want to make profits than continue holding through price rises. Adler highlights that every rally brings an increasingly smaller premium for holders to their cost basis. This translates to increased selling pressure, as the market struggles with higher valuations.
It does not necessarily mean that the bull is finished, but rather it indicates a decrease in investor risk appetite. The profit-taking is slowly outweighing new demand. This could limit future rallies.
Adler does expect two further significant rallies to occur in this cycle. These will be driven by macro factors such as the two Federal Reserve interest rate cuts expected later this year. The events that are likely to occur could bring the market back into full swing and drive Bitcoin’s price up. Adler warns though that, after the final pushes of this rally, long-term holdings may overwhelm new demand and lead to an even larger correction.
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Test Price Resistance after Breakdown
Bitcoin (BTC), which is now trading at $114.690, is attempting to recover from a recent sharp drop below $115.724 as a support. This level has become regarded as stumbling block. BTC is forming a small rebound on the daily chart after hitting a low of $112200. The price has been consolidating at $112218 for 50 days Simple Moving Average. This moving average was a strong support in the recent correction. It prevented the price from falling further towards $110K.
It is important to keep an eye on the next level, which is $115.724 of resistance. If this level is closed above on a daily basis, it could signal the potential return of previous ranges and increase the likelihood of a test of the local high of $122,077. BTC’s failure to breach this barrier could signal that the bears remain in charge, which would lead to another possible test of support at 50-day SMA.
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Volume is low compared with previous rallies. This suggests a lack in buying momentum. Should further pressure on the downside emerge, key dynamic levels of support remain at the SMAs at $100,926 for 100 days and $99 345 for 200 days.
Chart from TradingView, Featured Image from Dall E
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Source: www.newsbtc.com
