A Bitcoin analyst believes that the cryptocurrency remains in a bull market, having briefly bounced back to over $112,000 on Monday after a turbulent week.
Bitcoin (BTC) has faced challenges in the past week, as analysts noted signs of investor fatigue, with a sharp decline last week leading to two significant liquidation events in the broader crypto market.
On Monday, Bitcoin reached a 24-hour high of $112,293 in early trading, going above $112,000 for the first time since its plunge on Thursday. It is currently priced at $111,835, according to CoinGecko.
Bull market “not over” for Bitcoin
However, XWIN Research Japan, a crypto investment firm, stated in a CryptoQuant note on Sunday that “despite the recent volatility unsettling traders, on-chain data still indicates that Bitcoin’s bull market is far from over.”
The firm observed that the behavior of long-term holders and Bitcoin’s Market Value to Realized Value (MVRV) ratio, which compares its market value to the average cost basis of holders, indicates “resilience beneath the surface.”
“Recent pullbacks seem less like the conclusion of a rally and more akin to a phase of digestion,” XWIN remarked.
Bitcoin’s MVRV ratio has declined to 2, with the average cost basis at roughly half the value of Bitcoin’s price, which XWIN argued historically “shows neither panic nor euphoria.”
“Investors are still sitting on solid gains, while the market has cooled from previously overheated conditions,” it elaborated, observing that past cycles have seen Bitcoin enter “its strongest expansion phase” following consolidation in this MVRV range.
Meanwhile, long-term investors have reduced their profit-taking activities, which XWIN noted “effectively lowers the available supply, offsetting immediate volatility and setting the stage for renewed demand to drive prices higher.”
XWIN asserted that the two metrics indicate “this cycle has not reached its terminal phase,” adding that the recent consolidation “could lay the foundation for the next significant upward movement—implying the bull market is very much alive.”
Crypto longs decimated by Bitcoin’s fall
Bitcoin’s rebound follows a period where crypto bulls experienced over $4 billion in losses from two major liquidations during the past week.
The first significant liquidation occurred on Monday, Sept. 22, when nearly $3 billion in long positions were eliminated as Bitcoin declined 3% below $112,000, further dragging down the entire market, per CoinGlass data.
This was followed by a $1 billion liquidation of total crypto longs on Thursday, as Bitcoin again dropped to $109,000.
Related: Expect major BTC corrections before new all-time highs: Analyst
Bitcoin accounted for the majority of the liquidations on Sept. 22, with $726 million in long positions wiped out, while Ether (ETH) long positions dominated on Thursday, resulting in $413 million lost.
Crypto sentiment rises to “Neutral”
In addition, the sentiment monitoring tool Crypto Fear & Greed Index has improved to indicate that the market is “Neutral” for the first time since Friday, Sept. 19, recovering from a phase of “Fear.”
The index reached a score of 50 out of 100 on Monday, increasing by 13 points from Sunday.
This reflects a continued upward trend after the index dropped to a score of 28 on Friday, its lowest since mid-April when Bitcoin fell to $80,000.
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