Bitcoin Is Currently In “Bear To Bull” Transition Period

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Data from Glassnode suggests that Bitcoin is currently in the historical bear market to bull market transition period.

Bitcoin Correlation Between Price And Supply In Profit Recently Was Below 0.75

According to a recent report by Glassnodethe BTC correlation between the price and the supply in profit generally observes multiple drops below 0.75 during transitional periods.

The “supply in profit” is an indicator that measures the percentage of the total Bitcoin supply that is holding some profit now.

The metric works by looking at the chain history of each coin to see what price it was last moved to. If this previous selling price is less than the current BTC value for any coin, then that particular coin has some unrealized profits at the moment.

The correlation between the price of the crypto and its supply in profit tells us whether the two metrics have moved in the same direction or not.

Now, here is a chart that shows the trend in this Bitcoin correlation over the history of the crypto:

Bitcoin Price And Supply In Profit Correlation

The value of the metric has been low multiple times in recent days | Source: Glassnode's Market Pulse

Whenever the correlation is positive, it means that the price and the supply in profit are both moving in the same direction. On the other hand, negative values ​​imply that they go in the opposite direction.

As you can see in the graph above, Bitcoin has historically had values ​​above 0.9 for the majority of the time during each of the previous price cycles.

However, during periods of transition between bull markets and bear markets (as well as vice versa), the indicator usually observes multiple drops below 0.75.

According to the report, these deviations occur in the case of bear to bull transitions because in late bear market stages, sellers become exhausted while the remaining investors become reluctant to move their funds out of frustration, thus decreasing the correlation between price and supply in profit. .

And during the opposite transitions, the supply in profit generally increases to almost 100% (as the price rises to a new ATH), thus reducing any correlation with the price.

Recently, the indicator has observed multiple dives below the 0.75 threshold, suggesting that Bitcoin is currently in the historical bear to bull transition zone.

BTC price

At the time of writing, the price of Bitcoin is floating around $19.1k, down 4% in the last seven days. Over the past month, the crypto has lost 10% in value.

The chart below shows the trend in BTC price over the last five days.

Bitcoin price chart

Looks like the value of the crypto hasn't shown much movement in the past few days | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com

Source

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