A blockchain analysis firm said Bitcoin (BTC) is still in a “euphoria stage” despite a recent correction based on on-chain metrics.
The company said in a new report that BTC's current price decline is still tame compared to previous cycles, suggesting the crypto king is in the early stages of a bull market.
“Going back to the magnitude of drawdowns that I mentioned earlier, we see that despite significant profit-taking by existing holders, the magnitude of drawdowns remains historically small.
Compared to the ATH (all-time high) break in past cycles, the current euphoria stage (price discovery market) is still relatively young. Previous euphoria stages have seen many price drawdowns of more than -10%, but most are much more severe, with 25% or more common.
The current market has only seen two corrections of 10% or more since the ATH was broken. ”
Based on on-chain analysis from the industry's largest exchanges, Glassnode says Bitcoin's strength last year was primarily due to inflows from the spot market. The company also said that BTC's short-term correction is supported by “new demand” from new entrants to the market.
“Bitcoin’s strong market performance over the past 12 months has been supported by significant increases in both spot trading volumes and on-chain flow associated with exchanges. We can also measure that the demand side is doing significantly better, even though we are patient with the makers rather than the takers.
The market is currently above its 2021 ATH and profit-taking has been active, but this has been calming down in recent weeks. The balance of wealth is roughly balanced between long-term holders and new demand, suggesting that the “well-being'' phase is still relatively early from a historical perspective. ”
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