Bitcoin’s 16% Dip Temporary, Bull Cycle Predicted: On-Chain Research

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Bitcoin after ETF Approval: Short-term Dip or Long-term Worry?

After the approval of ETFs that track the spot price of Bitcoin, Bitcoin has experienced a 16% drop from its peak of $48,000 on the day of the ETF approval. Is this price drop just a temporary obstacle? According to one analyst, yes.

History Repeating?

According to AMBCrypto’s analysis of Glassnode’s NUPL data, the Bitcoin market is in a phase of fear after more than a month of belief. However, according to renowned on-chain researcher Ali Martinez, this is just history repeating itself. He noted that Bitcoin has gone through several such phases where belief was followed by short fear, during which significant price drops were seen. Martinez predicted: “If history is any indication, this could be a temporary obstacle before the uptrend continues.”

Recovery? Not So Soon

However, the reversal is likely not to happen immediately. In a separate analysis, Martinez used Fibonacci retracement levels to conclude that Bitcoin could potentially drop to as low as $32,000 before it rises again.

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On-Chain Fundamentals Still Look Promising

To further understand things, AMBCrypto took a closer look at CryptoQuant’s MVRV ratio. When the MVRV is above 3.7, it is said that Bitcoin is overvalued, leading to market highs. When it is below 1, it is said that Bitcoin is undervalued or hitting market lows. At the time of publication, the indicator was at 1.76, suggesting the early stages of a bull cycle.

In addition, at the time of publication, about 77% of all circulating Bitcoins were held at a profit, the highest level since December 2021. This was also above the 365-day moving average, suggesting a change in price trend to bullish.

Outlook

These indications paint a significantly more positive picture for Bitcoin than its price charts. Given the developments in the crypto market, Shivam Thakral, CEO of Indian cryptocurrency exchange BuyUcoin, said: “The crypto market continues to see selling pressure as Bitcoin ETFs have made entry and exit into the investment vehicle very easy. The next market mover could be the interest rate cut announcement by the US Federal Reserve, which they have signaled for the end of 2023.”

Sources:

AMBCrypto, Glassnode, CryptoQuant, BuyUcoin

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