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The market is not yet in what appears to be the last stage of stress before an expected significant recovery for Bitcoin.
Sellers in control of Bitcoin
With Bitcoin trading below important moving averages and sticking to a distinct declining resistance trendline, the current price action reveals a brittle structure. The rejection of every attempt to push higher indicates that sellers are still in control of the overall trend.
The recent surge in the $67,000 range does not significantly alter the overall situation. The 200 EMA is still sloping downward above, supporting a macro bearish bias, and the price is still capped below the 50 and 100 EMAs.
In terms of structure, Bitcoin is creating lower highs, and the fact that resistance zones are not being reclaimed indicates that this is still a corrective phase rather than the start of a new uptrend.
Late-stage stress phase
This is consistent with the signals sent by on-chain data. Instead of complete capitulation, the current situation is more akin to a late-stage stress phase. Over a period of about 140 days, the profitability of long-term holders (LTHs) fell precipitously from 58% to just 3%. The market has undergone a major reset, which is indicative of mounting pressure from investors.
The important point is that LTH-NUPL is still marginally above zero. In the past, long-term holders have been forced into net unrealized losses in order for durable market bottoms to occur. Weak hands are forced out during that phase, which also resets structural positioning. That process is still ongoing.
Although they are under pressure, investors have not yet been compelled to realize significant losses. From a price standpoint, this implies that before a true bottom forms, Bitcoin may still have one more leg lower, or at the very least, a protracted period of choppy decline.
Dan Burgin
U.Today Editorial Team
Vladislav Sopov
