An intriguing on-chain indicator suggests the current Bitcoin bear market might be approaching its conclusion. This indicator, identified by CryptoQuant analyst Darkfost, historically precedes major recovery phases and, presently, brings optimism to many market participants.
What Do On-Chain Signals Reveal?
On-chain data indicates a potential transition phase, despite existing selling pressures. The analyst observed that Bitcoin managed to stay above key support levels, keeping hopes alive for an end to the bearish phase. A notable pattern arises when short-term holders (STH) maintain a lower cost basis than long-term holders (LTH) for at least three days.
Typically, short-term holders are investors holding Bitcoin for less than six months, while long-term holders possess it for longer. This alignment has historically preceded the conclusion of bear markets, setting the stage for subsequent bullish rallies. It’s noteworthy, however, that the occurrence of this signal doesn’t promise an instant turnaround, as Darkfost highlighted.
This indicator suggests Bitcoin might be in the last part of its bearish phase, but it does not mean a rapid shift to bullishness is certain.
Is Now a Good Time for DCA Strategies?
Indeed, the current low cost basis of short-term holders compared to long-term ones hints at promising prospects for dollar-cost averaging (DCA) investors. These moments are characterized by more affordable Bitcoin prices, providing strategic entry points for those employing DCA methods.
Despite a recent drop in Bitcoin prices, fresh investors have been actively accumulating, as evidenced by the decrease in short-term holders’ acquisition price from $112,500 to approximately $69,000, triggering the rare on-chain event.
The continuation of this pattern could signal recovery once newcomers start purchasing Bitcoin above the long-term holders’ cost basis, a scenario marking past rejuvenated demand periods.
- Short-term holders’ cost basis recently fell from $112,500 to $69,000.
- Bitcoin price resilience persists above critical support levels.
- The $67,248 threshold is identified as a crucial resistance level to overcome.
Bitcoin exhibits resilience even after notable sell-offs, such as the 3,588 BTC sale by Strategy for dividend payments. The market has withstood these trials, maintaining stability above the essential $60,000 line. A breakthrough at $67,248 could herald a new bullish era, signaling the bear market’s end.
Bitcoin currently trades around $64,141, supported by a vibrant, though reduced 24-hour trading volume of $29.31 billion, and a robust market capitalization of $1.29 trillion. Continued price movements are closely watched, as analysts anticipate whether the crucial resistance levels will be breached soon.
