Bitcoin Dumped by $6K Daily But These On-Chain Metrics Suggest Bull Market Is Still On

Bitcoin went through one of its most spectacular runs in recent history since the US elections three weeks ago, skyrocketing from under $70,000 to just shy of $100,000.

After gaining more than $30,000 in less than a month, it was almost inevitable that the asset would eventually retrace, which happened yesterday as BTC was rejected at $99,000 and pushed south hard by over six grand in hours.

Warnings

There were some warning signs about a pullback, though. CryptoQuant’s analysts outlined a few factors that contributed to this correction, including Short-Term Holders (STH) taking profits since their bags increased by 40-50% within weeks against the dollar. Although this meant that there could still be a chance to run at $100,000, the most probable scenario envisioned a price drop.

The fear of missing out (FOMO) levels were on the rise as well, which typically signals a potential local top. Additionally, the Fear and Greed Index, the metric showcasing the current market sentiment, was deep in ‘greed’ territory for weeks. After all, we all know Warren Buffett’s advice to sell when others are greedy.

As reported earlier, many analysts on X outlined that such a price decline after a massive rally is to be expected. In fact, they even warned that BTC had pulled back a lot harder in previous bull cycles, meaning that the asset’s bottom might not have reached yet.

On-Chain Data Says Bull Market Still On

CrytpoQuant’s MAC_D analyst also weighed in on the matter, indicating that this price slump was “due to leverage overheating, as open interest and estimated leverage ratio reached annual highs.” They added that a similar or even larger correction of up to 20% “can be seen as a natural phenomenon.”

While another price drop seems likely for the short term, MAC_D highlighted a few on-chain metrics that suggest the bull market is still active and BTC hasn’t reached this cycle’s peak yet.

“Cycle metrics such as MVRV, NUPL, and Puell Multiple still indicate that Bitcoin is in a bull market with upward potential. The key here is to identify major accumulation periods during corrections, with the ‘Short-Term SOPR’ metric being particularly useful.”

The short-term SOPR metric jumped to almost 1.1 on November 21, meaning that STHs had begun realizing profits, which could actually be good news for BTC.

“Historical patterns show that when short-term investors sell Bitcoin at a loss, it often leads to a rebound.”

Whales Keep Buying

And while short-term holders seem to be offloading their assets, some even at a loss given the billions of dollars accumulated at prices of around and over $97,000, whales stand on the opposite corner.

Lookonchain data shows that five fresh wallets had withdrawn $86.4 million in BTC from Binance even before the crash.

Whales continue to accumulate $BTC!

In the past 5 hours, 5 fresh wallets withdrew 886 $BTC($86.4M) from #Binance.

Address:
bc1qqjyqej2llypzvz7nx8fd4pd2vsyfcxjug8z45g
bc1qlwa9n5qgjaa8rutm8pd64nv7xms2c37p2h0ver
bc1qvjvcpehcrdneqeqhmqzdrday88cx0h2munprec… pic.twitter.com/TI1bZxXNhA

— Lookonchain (@lookonchain) November 25, 2024

And, let’s not forget MicroStrategy. The Saylor-founded company announced another mind-blowing purchase worth nearly $5.5 billion yesterday, pushing its total holdings to almost 387,000 BTC.