Recent data from on-chain indicators analyzed by CryptoQuant reveals that long-term holders of Bitcoin (LTHs) are currently situated near breakeven levels. Historically, this scenario has often taken place right before the bottoms of bear markets. As traders prepare for delayed inflation data from January, following a surprisingly strong jobs report, many are concerned that the ongoing higher-for-longer interest rate expectations could lead to renewed downside pressure on the cryptocurrency market.
Some analysts argue that panic selling may be nearing its limit, supported by extreme fear readings and considerable accumulation near the critical $60,000 support zone. Bitcoin is displaying signals that have historically marked major turning points in past cycles; however, it has yet to exhibit those signs typically associated with a durable market bottom. Several metrics, including LTH capitulation, Market Value to Realized Value (MVRV), Net Unrealized Profit/Loss (NUPL), and the proportion of supply currently in profit, suggest the market is caught between a mid-cycle correction and a deeper systemic reset.
According to CryptoQuant’s recent findings, bear market bottoms typically coincide with periods when LTHs are experiencing loss margins of 30% to 40%. Profits for long-term holders have dropped significantly from 142% in October to breakeven levels, although analysts caution that this does not signal true capitulation. Ryan Lee, chief analyst at Bitget, mentioned, “I broadly agree the market may not have confirmed a macro bottom yet,” noting that liquidity remains tight and risk assets are still reactive to macroeconomic data. He highlighted the risk of a final washout should equities continue to weaken.
In addition, the MVRV Z-score hasn’t yet entered the oversold zone typically seen between -0.4 and -0.7, where bottoms have historically formed. NUPL, currently around 0.1, indicates that price bottoms usually emerge when holders experience approximately 20% unrealized losses.
Major financial institutions, including Goldman Sachs and Standard Chartered, have adopted a bearish outlook on Bitcoin, predicting a price range between $50,000 and $58,000 in the forthcoming days. Following the unexpectedly hot jobs report, traders are awaiting new inflation data set for release on Friday, which had been delayed due to a partial government shutdown. Should inflation rise unexpectedly, this could reinforce the prolonged high-rate environment, further applying pressure on risk assets like Bitcoin.
Investors currently face one of the most unpredictable macroeconomic climates in years, with conflicting signals complicating market trends. However, not all analysts share a pessimistic view. Sean McNulty, APAC derivatives trading lead at FalconX, noted that the Crypto Fear & Greed Index dropped to an 11/100 reading, highlighting a moment of acute panic and potential seller exhaustion. He emphasized that, unlike the dramatic downturns of 2022, the current slump is driven more by macroeconomic shifts and liquidity issues than by a catastrophic event like the FTX collapse.
McNulty also referenced Bitcoin’s recent price action, including a brief dip to $60,000 that triggered a sharp 19% rebound within 24 hours. This surge coincided with social sentiment reaching peak capitulation. Notably, a historic single-day inflow of 66,940 BTC into accumulation addresses indicates that large institutional investors are actively defending the $60,000-$62,000 area.
With the MVRV Z-score at 1.2, cryptocurrency data suggests that Bitcoin is trading at deep value, indicating limited potential for a sustained drop below the $55,000 realized cost basis. As the market navigates through these turbulent times, the interplay between macroeconomic indicators and on-chain data will be crucial for forthcoming trends in Bitcoin’s price trajectory.
