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Bitcoin Reaches Critical Juncture Amid Bear Market Warning: Insights from Onchain Data

Bitcoin’s current market situation is critical, with various indicators suggesting a potential downturn while others hint at a price stabilization. Priced at $57,700, bitcoin has rebounded from last week’s low of $53,600. However, it remains in a downward trend since March’s peak of $73,800, with successive lower highs at $71,300 and $63,900.

CryptoQuant data indicates a looming major correction or the beginning of a sustained bear market as the profit and loss index hovers around its 365-day moving average. Past instances of downward crossovers have preceded significant declines in May and November 2021. Additionally, CryptoQuant’s bitcoin bull-bear market cycle indicator is nearing a crucial level that suggests a shift towards a bear market.

Tether’s stagnant market cap growth implies a challenging road ahead for a potential rally, as historical rebounds have been linked to increased stablecoin liquidity. Despite this, significant bitcoin holders have been accumulating coins during the recent downturn, with a notable 6.3% increase in their holdings over the past month, the most significant rise since April 2023.

Germany’s substantial sale of seized BTC seems to be concluding, with the country nearly depleting its reserves after confiscating 50,000 BTC from Movie2k in January. Furthermore, positive developments such as the approval of an ether ETF in the U.S. and the ongoing expansion of U.S. stock indices, historically correlated with bitcoin, suggest a positive outlook for 2024, despite indications of short-term fatigue.

The interplay of these factors underscores the complexity of the current crypto landscape, where multiple indicators point to both potential risks and opportunities. As investors navigate these uncertain waters, staying informed and vigilant is paramount to making sound decisions in the ever-evolving world of cryptocurrencies.

This article was edited by Stephen Alpher.