CryptoQuant: Bitcoin’s 15% Dip Driven by Profit-Taking, but Bullish Momentum Persists

Bitcoin’s recent dip, marking a 15% correction from its peak at $73,700, has stirred discussions about the state of the ongoing bull cycle. Observers attribute this correction to profit-taking activities by miners, whales, and major investors, who seized the opportunity to capitalize on the surge in Bitcoin’s value.

Despite this correction, analysts at CryptoQuant remain optimistic about the longevity of the Bitcoin bull run. They point out that key valuation metrics suggest that Bitcoin has not yet reached the top of its current cycle.

BTC Correction Dynamics The Bull-Bear Market Cycle Indicator signaled an overheated bull market last week, coinciding with BTC’s drop from its peak to $60,700. This downward movement was primarily driven by traders selling off their holdings to secure substantial profits.

According to CryptoQuant’s findings, unrealized profit margins surged to 69%, the highest level since March 2021 when Bitcoin was trading at around $60,000. Although there has been significant selling pressure, the unrealized profit margins remain elevated at 47%.

Analysts noted that short-term Bitcoin holders, including traders, recorded the highest profit margins since May 2019, indicating a trend of profit-taking among this group following Bitcoin’s recent all-time high.

Moreover, significant BTC holders, possibly including miners, liquidated a substantial amount of their holdings as prices soared above $70,000. Approximately 567,000 BTC were moved when Bitcoin reached its peak on March 12, representing 35% of total transfers on the network.

Bull Cycle Endurance Despite the recent correction, CryptoQuant’s analysis suggests that the Bitcoin bull cycle is far from over. Demand for BTC in the United States has eased, as indicated by the negative Coinbase Premium observed shortly after BTC surpassed $73,000.

Should the correction persist, analysts anticipate Bitcoin’s price could retreat to the $58,000-$60,000 range, which corresponds to the cost basis of large short-term holders.

However, from a broader perspective, the current bull cycle appears to have more room to grow. Only 48% of Bitcoin investments come from short-term holders, whereas historical data indicates that bull cycles typically conclude with 84%-92% of investments from this group.

Furthermore, valuation metrics have not yet reached levels consistent with past market tops. The CryptoQuant P&L Index remains outside the market top zone, indicating a continuation of the bull cycle.

In conclusion, while Bitcoin may be experiencing a temporary correction fueled by profit-taking, the underlying metrics suggest that the bull cycle is still in motion, with potential for further upward movement.