After a surge of about one hundred percent in the first few months of 2023, the value of the cryptocurrency considered the most valuable in the world is now experiencing a correction of ten percent. Experts in CryptoQuant argue that Bitcoin’s accumulation cycle is still in place despite the recent drop in its price, and they advise traders to keep a level head despite this.
According to the findings of research conducted by CryptoQuant, Bitcoin technically crossed a significant inflection point at the beginning of the year. This point was located at the intersection of the falling and rising trend lines. This point acts as a technical dividing line and determines the market from 2021 up to the halving year of 2024.
Additionally, the realized price indication, which represents the average price of all Bitcoin purchases, has been surpassed by Bitcoin’s current price. This suggests that the typical buyer of Bitcoin is earning a return on their purchases.
The behaviour of the Bitcoin market may be broken down into periods of accumulation and distribution, constituting cycles that last many years. Historically, institutional money has been seen as more favourable during accumulation cycles, while individual investors have been more active during distribution cycles. The history of Bitcoin is also marked by occurrences known as halvings, which are always preceded by an accumulation cycle called a pre-halving cycle.
ESR vs spot price
The exchange stablecoin ratio (ESR) of Bitcoin is now operating as a leading indicator for Bitcoin and other digital assets, even though the spot price of Bitcoin has been declining. Between 2021 and 2022, the ESR and the spot price of Bitcoin moved closer together, but the increased selling pressure over the last year severed their association.
Nevertheless, at the end of 2022, a shift in the exchange stablecoin ratio occurred, and it is presently climbing to new heights. In the present configuration of the market, ESR acts as a magnet for the spot price of Bitcoin.
In conclusion, CryptoQuant analysts think various technical and on-chain variables still support Bitcoin’s market structure. Bitcoin is supported theoretically by the multi-year inflection point, and it is also supported by the realized price, developing ESR divergence, and the pre-halving accumulation cycle. Even if there was only a recent downturn, traders should keep cool and believe in Bitcoin’s accumulation cycle.
