What to know:
- Bitcoin bear market may be entering its final phase as a rare on-chain signal flashes for the first time this cycle.
- CryptoQuant analyst Darkfost says the signal has historically appeared before major Bitcoin recovery rallies, not immediate reversals.
- Bitcoin continues holding above key support despite recent selling pressure, keeping bullish hopes intact.
The Bitcoin bear market might be at the end of its run as an unusual on-chain indicator has popped up in this particular cycle for the first time. According to crypto analytics site CryptoQuant’s analyst Darkfost, this particular indicator has usually shown up before a significant Bitcoin recovery rally.
Even though Bitcoin has come under selling pressure recently, it still sits above the critical support zone, adding to hopes of the Bitcoin bear market being on the verge of ending.
Bitcoin Bear Market Nears Final Stage
Darkfost claims that Bitcoin has sent a rare on-chain signal that is usually seen before the end of Bitcoin bear markets. This signal has been validated once the STH cost basis dipped below the LTH cost basis, remaining at a lower level for three straight days.
The Darkfost pointed out that such a scenario has usually signaled the start of the last phase of a Bitcoin bear markets leading to the emergence of a new bull market.
But according to Darkfost, this indicator doesn’t signify that the markets are set to turn bullish instantly. It only means that Bitcoin could have entered the last phase of the bearish period.
Darkfost also pointed out that this particular period has traditionally provided an excellent chance for DCA investors to invest in a stock because its price is lower at this time.
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Why Bitcoin’s Rare On-Chain Signal Matters
As per Darkfost, short-term holders are those who have held onto their Bitcoin for a period of less than six months, while long-term holders hold on to their investments for a period greater than six months.
In the current downtrend, new investors kept on purchasing their Bitcoin. As a result of this, the cost of acquisition for short-term holders fell from $112,500 to almost $69,000.
This means that the STH cost base fell beneath the LTH cost base, resulting in the unusual signal which has historically been generated near the tail end of every Bitcoin bear market.
The analyst expects the next bull cycle to begin when new investors buy Bitcoin at costs higher than those at which long-term holders bought their Bitcoin. This change has usually meant that buying interest has come back during previous cycles.
Bitcoin Holds Above Key Support Despite Selling
It should be noted that bitcoin remains strong despite all the challenges it faces now. Having fallen to $57,747 almost three weeks ago, the crypto managed to recover from the downturn and stayed above the vital level of $60,000 support.
It is also worth mentioning that the market managed to remain steady after Strategy decided to sell 3,588 BTC for almost $216 million as part of the dividend payouts.
The next important level is $67,248. The breakthrough of this resistance would add weight to the idea that the Bitcoin bear market has come to an end and the bullish run is about to begin.
At the time of writing, BTC is trading at $ 64,141 with a 24-hour trading volume of $ 29.31 billion and a market capitalization of $ 1.29 trillion. According to CoinMarketCap, the BTC price increased 1.63% over the last 24 hours.
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This article contains market analysis and price predictions. These are not guarantees. Crypto markets are volatile. Always DYOR. Not financial advice.
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