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Over the years, the Bitcoin market has suffered a number of flash crashes. In fact, they’ve almost become an unavoidable ritual at this point. The one on September 7th was successful in instilling dread and panic in the minds of relatively fresh market participants.
As a result, weak hands were forced to liquidate their HODLings. What did other people do? Market participants who have experienced such falls in the past have resorted to adding extra coins.
So, is it already time to give up on Bitcoin?
Cycles exist in all markets. The Bitcoin market too, for that matter, is cyclic in nature. After every 210,000 blocks are mined [approximately every four years], the cycle changes. This is essentially marked by the halving event that takes place where miner rewards are cut by 50%. Every phase of every cycle thus far has been significant in its own way.
Hence, looking at the way bull markets have unfolded in previous cycles would give us a rough idea about what to expect this time around.
In 2013, it took almost 287 days for Bitcoin’s price to hit an ATH. Similarly, in 2017, it took the market around 289 days to achieve the same feat. As far as this year is concerned, we’ve already crossed the 250-day threshold and are merely a month away from stepping into the 280-day phase. By and large, this means that the clock is ticking fast.
However, if the number of blocks since previous highs are to be considered, the Bitcoin market has additional time in hand. The crypto’s price peaked when it was around block number 50,000 in 2013, while it managed to pull off the same at around block 44,000 in 2017.
Now, as can be seen from the chart attached, block 48,000 appears to be quite close to the implied top of this bull run.
Over 40K blocks have already been mined, and we need to travel another 8000 blocks to get 48K. Using the 10-minute block time, we can estimate that the market is around 55 days away from its top.
Furthermore, the cyclic pricing has always maintained the spiral’s purity by staying well inside the confines of its separate concentric circles. As a result, there is no divergence this time.
All-time highs are represented by the blue dots in the chart below. Surprisingly, they’ve all fallen into the same quarter of the circle thus far. As a result, if history repeats itself, the market will most likely see another top in the coming months.
Signs of revival
By and large, the market has been able to put its resilient foot forward post the crash. At press time, the market’s king coin was seen trading at $45.3k, down by 3% when compared to the previous day.
CryptoQuant CEO Ki Young Ju, in a recent tweet, highlighted that whales have started sending Bitcoins to derivative exchanges from other exchanges. According to the exec, these large market participants are either punting new positions or filling margins.
Whenever this has happened in the past, Bitcoin’s price has ended up appreciating in the long term after their accumulation. In fact, the exec also argued that their positions seem to be long positions this time too.
At the time of writing, the Spent Output Profit Ratio was also showing a favourable trend. The SOPR is a measure of the profit/loss position that coins traded on a given day are in. At the time of publication, this measure had recovered from its slump and was profitable.
As shown in the accompanying chart, the drop below 1 on September 7th was more defined for short-term HODLers, signalling that they were the ones who sold.
On the contrary, the long-term SOPR has recovered without even visiting 1. This is essentially a textbook bull run setup.
Given the current status of the aforementioned parameters and the way things have played out in the past, it is reasonable to conclude that now is not the time for market participants to abandon their HODLings.
The market is about two months away from reaching its apex. As a result, selling at that time would net HODLers a higher profit than selling now.