Bitcoin’s (BTC) recent uptrend was met with euphoria and skepticism as prices rallied 40% in the past month – despite ongoing contagion effects spread by the fall of centralized crypto players.
Bitcoin slipped to as low as $15,700 in November as the crypto market deal with the insolvency of crypto exchange FTX and bearish sentiment in global stock markets. Prices mostly ranged between $15,700 and $17,500 until the first week of January.
The cryptocurrency has surged since then, alongside growth in ether (ETH), decentralized finance (DeFi) markets and the broader equity market. Before retreating, bitcoin reached five-month highs above $23,500 earlier this week as traders took profits.
However, some analysts say that while overall market sentiment cannot be called bullish just yet, the recent price and on-chain data suggests that bitcoin could be in the later stages of a bear market.
“Although current bitcoin performance suggests that the bottom might already be in, we are not out of treacherous waters yet, as we have not seen a full year pass since the 2022 bear market rally,” analysts at crypto exchange Bitfinex said in a markets note this week.
“Early 2020, before the third bitcoin rally of eight green candles, was a time of massive volatility amongst bearish macro conditions; this might be what we experience now in the first and second quarters of 2023,” the analysts added.
The note cited Glassnode that suggested short-term holders (STH) of bitcoin selling now at profit while long-term holders (LTH) continue to hold massive spot positions – a move that “looks increasingly bullish for bitcoin.”
However, the macro sentiment remains a cause for concern.
“Since the asset class is currently highly correlated to the U.S. stock market, bearish macro developments can restrict the asset (bitcoin) from repeating past performances,” Bitfinex analysts said.
Meanwhile, selling pressure on bitcoin from miners, a key part of the Bitcoin ecosystem, hit three-year lows last week.
As reported by CoinDesk last week, on-chain flows show the amount of bitcoin transferred from miner addresses to wallets owned by exchanges has declined to multi-year lows.
Miners are entities that supply computing power to any blockchain network in return for “rewards” in the form of tokens. These rewards are continually sold by miners to cover operational costs – which are fairly intensive. Some miners filed for bankruptcy protection last year – and liquidated holdings, contributing to selling pressure in the market.
Dwindling miner sales imply weaker selling pressure from those responsible for making coins and are generally viewed as bullish.