Bitcoin Correction Signals Mid-Cycle Reset, Not Bull Market End: CryptoQuant

The ongoing Bitcoin correction is resetting market valuations rather than marking the end of the current bull cycle, according to CryptoQuant contributor CryptoZeno.

In two separate analyses, he examined Bitcoin’s long-term holder (LTH) MVRV and Adjusted Net Unrealized Profit/Loss (NUPL) metrics. Both indicators suggest that experienced investors remain committed despite recent price weakness.

Long-Term Holder MVRV Points to Valuation Reset

Notably, Bitcoin is trading at $64,500, up 4% over the past day, but it remains down 49% from its all-time high.

CryptoZeno said that Bitcoin holders who have held their coins for six months to 10 years are showing signs that the market is undergoing a reset rather than rushing to sell.

Unlike the major market tops in 2017 and 2021, the adjusted MVRV indicator remains far below the levels that typically signal heavy profit-taking by long-term investors. Instead, on-chain data suggests that these holders are remaining patient.

The report also found that the average price these long-term holders paid for their Bitcoin continues to rise, even though Bitcoin’s market price has declined. This suggests that the recent downturn is mainly driven by weaker prices rather than long-term investors selling their holdings.

According to CryptoZeno, this type of correction helps eliminate short-term speculation while keeping long-term holders invested, creating a healthier market environment with a more limited Bitcoin supply.

NUPL Shows Market-Wide Profit Reset

In a separate analysis, CryptoZeno examined Bitcoin’s Adjusted NUPL, which tracks unrealized profits and losses across the network.

He found that the indicator has moved closer to neutral following the recent price correction, meaning investors’ unrealized profits have declined significantly. Historically, this type of movement has signaled a market reset rather than the beginning of a prolonged bear market.

Long-Term Holders Remain Resilient

However, investor behavior differs between long-term and short-term Bitcoin holders.

Long-term holders are still sitting on substantial unrealized profits, even though those gains have declined from previous highs. This suggests they remain confident and are not showing signs of panic selling.

Short-term holders, on the other hand, are close to breaking even after recently experiencing paper losses. Their lower profit margins make them more likely to sell in response to market sentiment until prices begin to recover.

Overall, CryptoZeno said that both the MVRV and NUPL indicators suggest the market is experiencing a healthy profit reset rather than a full capitulation.

If long-term holders continue to hold their coins and new buyers step in to absorb the limited supply, the current correction could represent a mid-cycle reset rather than the end of the bull market.