Bitcoin's potential for a deep correction is decreasing as analysts suggest a bullish market shift is on the horizon.
As the cryptocurrency market enters 2024, the potential for a severe Bitcoin correction appears to be diminishing, according to Michaël van de Poppe, founder of MN Trading. He highlighted that the current rally has been notably less pronounced compared to previous cycles, which could indicate a lower likelihood of a deep bear market.
"The previous bull run in 2024 on #Bitcoin has been significantly shallow. It means that we haven't seen the upside volatility that we almost always get," van de Poppe noted.
He pointed out that the lack of sharp price increases and parabolic curves during this bullish phase suggests a more stable market environment. Van de Poppe believes that with many indicators currently at low levels, it could be an opportune time to adopt a bullish stance, anticipating a market shift in the next 12 to 24 months.
In the context of current market volatility, analyst Darkfost observed that many participants are adopting a wait-and-see approach. The Coin Value Days Destroyed (CVDD) metric reveals that long-term holders (LTHs) are largely inactive, indicating a preference for holding Bitcoin rather than selling.
"Long-term holders have become very inactive and appear to prefer holding their Bitcoin," Darkfost explained.
With the CVDD value around 0.34, this suggests that LTH spending is at levels typically seen in bear markets. Darkfost noted that significant LTH selling tends to occur only when CVDD exceeds 2, marking local peaks in the market cycle.
Key Support Levels
Joao Wedson, founder of Alphractal, warned that Bitcoin must maintain the crucial support level of $63,700. A breach of this level could lead to further declines, with potential risk levels identified at $57,000, $52,400, and a worst-case scenario of $48,700.
"If this key on-chain level breaks, it could trigger a new downside move in the market," Wedson cautioned.
These critical indicators are dynamic and adjust daily based on market behavior, suggesting that losing key structural levels could initiate a redistribution phase in the market. Analyst Willy Woo also noted that despite Bitcoin's recent decline from $70,000, investor inflows have been recovering since mid-February.
According to Woo, the expected volatility index (VIX) in the stock market points towards a potential shift to a more risk-on strategy in the near future. He believes that the growth of digital assets could resume by the end of April, contingent on liquidity inflows.
CryptoQuant has previously suggested that Bitcoin's rise to $74,000 should be viewed as a temporary rebound rather than the onset of a new bull market.
