Bitcoin's 15% Correction Is Driven by Profit-Taking, but the Bull Cycle is Far from Over: CryptoQuant

Bitcoin (BTC) has been in a price correction phase after rising to an all-time high of $73,700. Miners, whales and other market participants including large investors had started selling their BTC to make profits.

However, analysts at CryptoQuant believe that the Bitcoin bull cycle is far from over, with price valuation metrics largely lagging behind the levels of past market highs.

BTC in correction mode

The bull-bear market cycle indicator pointed to an overheated bull phase last week as BTC plunged from $73,700 to $60,700. The decline was triggered by traders dumping inventory to make high profit margins.

CryptoQuant found that unrealized profit margins rose to 69%, the highest level since March 2021, when BTC was trading at around $60,000. Even though traders are selling their assets, unrealized profit margins are still at a high level of 47%.

“In fact, short-term Bitcoin holders (including traders) sold Bitcoin at the highest profit margin since May 2019. This suggests that short-term Bitcoin holders took profits after this latest price catapulted Bitcoin to a new all-time high,” analysts said .

As prices rose above $70,000, large BTC holders also dumped their assets. In total, they moved 567,000 BTC when the digital asset reached its all-time high on March 12, accounting for 35% of total transfers on the Bitcoin network.

According to CryptoQuant, some of the big holders are Bitcoin miners. Due to the recent Bitcoin rally, miners saw record-breaking daily revenue and there was a significant increase in their BTC transfers to over-the-counter counters as the crypto asset crossed $70,000.

The bull cycle is far from over

Additionally, demand for BTC has waned in the United States, as evidenced by the Coinbase premium, which turned negative shortly after BTC hit $73,000. Analysts noted that if the correction continues, BTC could fall to the $58,000-$60,000 mark, which is the cost base of large short-term holders.

Looking at the longer term, BTC has not yet reached this peak of the bull cycle, as evidenced by low new investment flows. Currently, about 48% of Bitcoin investments come from short-term holders, while bull cycles in the past typically end with 84%-92% of investments coming from this investor cohort.

“In addition, the valuation metrics are not yet anywhere near the level of previous market highs. The CryptoQuant P&L index is still outside the upper market zone (red zone) and above the index’s 1-year moving average,” analysts added.

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