Crypto investors are delighted over Bitcoin’s immense gains this year, rising 50% less than two months after the approval of U.S. Bitcoin spot ETFs in January.
Yet those gains may also be a source of uncertainty – especially for traders. Until this week, Bitcoin had never broken the highs of a prior bull market top until several months after its one-in-four-year “halving” event.
Now that it’s done so ahead of schedule, could the asset’s long-standing four-year market cycle be thrown completely out of whack?
“So far, it seems that the four-year cycle remains intact,” Julio Moreno, Head of Research at CryptoQuant, told Decrypt. The analyst noted that Bitcoin’s price still moved in line with the cycle when it tapped its low of $15,500 in November 2022.
The on-chain analytics platform relies on Bitcoin’s MVRV ratio as an effective metric for gauging Bitcoin bull and bear markets. The ratio compares Bitcoin’s market cap to “realized cap”—the sum value of all coins at the time they were last sold.
The higher the ratio, the more profit Bitcoin investors are sitting on, and the more incentive they have to start selling their coins—possibly marking a bull market peak.
“MVRV ratio still hasn’t passed the 3.7 thresholds that would indicate a cycle top,” said CryptoQuant.
According to Moreno, valuation metrics show that the bull market officially began in January 2023, in line with its actual price action. A year later, record-high demand for Bitcoin drove it to an early all-time high, largely in part due to ETF demand.
“We classify the market cycle in phases: extremely bear, bear, early bull, bull, and overheated bull,” Moreno explained. “Right now, we remain in the bull phase.”
On-chain analytics provider Glassnode has multiple metrics for gauging cycle extremes. One of those is MVRV, while others include the rate at which investors are HODLing, and how many profits are being taken by investors relative to losses (also known as Spent Output Profit Ratio, or SOPR).
As of March 6, the 90-day moving average for SOPR stood at 1.03—a high not seen since early May 2021.
Nevertheless, lead Glassnode analyst James Check remains ultra-bullish that Bitcoin still has much room to grow.
“I would be very surprised if we don’t crack $250K this cycle,” he said during an interview on Thursday. “The structure I’m seeing in this uptrend is very, very robust.”
Edited by Ryan Ozawa.