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The cryptocurrency market, led by Bitcoin, tends to follow a cyclical pattern of ups and downs, reflecting investor sentiment and market fundamentals.
Since the beginning of the current bull cycle in January 2023, Bitcoin has shown huge gains in both price and market duration. Increased inflows from new investors supported this growth and existing shareholders reinvested their profits.
However, recent indications suggest that the market may now be entering the final stages of this cycle, raising questions about what’s next for Bitcoin and the broader crypto market.
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Key Indicators Point to Realizing Prospects
An important metric that supports this recognition is the percentage of Bitcoin sold during the past month based on the market capitalization – UTXO, which currently sits at 36%, according to a recent analysis shared by CryptoQuant analyst known as Crypto Dan.
In the analysis, Dan points out that while this number remains lower than the highs seen in previous bull cycles, its decline suggests that the market is “moving towards its cycle high.”
Dan expects this peak to occur sometime between Q1 and Q2 of 2025. However, instead of a single explosive burst, historical trends show that the rate may experience two to four sharp increases before the cycle ends.
This pattern usually shows the market heating up, followed by the next correction or bear cycle. Dan also highlighted that although the market still has potential to gain, a conservative approach to risk management is recommended.
Historically, late bull cycles have been marked by increased volatility, as profit taking begins to influence market behavior. Dan wrote:
However, from a conservative perspective and with risk management in mind, caution is advised. For this reason, I plan to gradually sell my property.
Another important observation from the on-chain data is the relationship between short-term traders and long-term holders. Historically, a sharp increase in short-term trading activity often precedes a market correction.
Traders who enter the market during recent price rallies may start selling their assets, leading to a temporary drop in prices. In contrast, long-term holders tend to stay strong during these periods, providing a stabilizing force in the market.
Bitcoin Sees Recovery As New Year Begins
After weeks of struggling and staying below $100,000 in the last month of 2024, Bitcoin now seems to have resumed its bullish momentum as the first month of 2025 begins.
Although, BTC entered the new year at a price below $95,000. However, a few days later, the stock continued its upward momentum, regaining the $100,000 price mark to trade at the current price $101,624.
At the time of writing, BTC recorded an increase of 3.9% in the previous day bringing its price closer to its recently established value of over $108,000 last month.
The featured image was created with DALL-E, a Chart from TradingView