Bitcoin cycle analyst Root has revealed an explanatory chart that deciphers the complex stages of Bitcoin’s price based on a significant on-chain indicator. This chart, which shows the different stages of the cryptocurrency’s price in various 4-year cycles, sheds light on patterns that have emerged over time.
Solving the Mystery of Bitcoin Halving Fundamental Metrics
Root uses the “short-term holder cost basis” as a key on-chain indicator to separate periods of rise and fall. Short-term holders (STHs), representing the more impulsive side of the BTC market, include investors who have bought and sold in the last six months. The cost basis, or “realized price,” reflects the average price at which this group purchased their coins.
The chart shared by Root measures how much the indicator’s value deviates from the average using the Z-score of the STH cost basis. Bull markets indicated by green values and bear markets indicated by red values play a very important role in interpreting Bitcoin’s price trajectory.
Interestingly, the chart named cheat sheet consistently demonstrates a pattern throughout Bitcoin’s existence. According to this, the peaks of bull markets closely align with the troughs of bear markets.
The green dots representing market peaks indicate a phase of euphoria that reflects intense buying during high bull run price levels when the STH cost basis significantly exceeds the average. Conversely, the red dots indicating market bottoms emerge during an accumulation phase when STHs sell at high losses, paving the way for resilient hands to buy coins at low bear market prices.
Current Market Outlook: Bitcoin in the ‘Disbelief’ Phase
Examining the current scenario, Bitcoin finds itself in the “disbelief” phase, where investors hesitate to fully embrace the ongoing rally’s potential for sustainable growth. Following patterns from previous cycles, the chart suggests that the current cycle’s BTC bull run may not fully commence until 2025, in line with historical trends.
With recent developments, Bitcoin has experienced an approximate 3% increase in the last 24 hours, rising above the $44,000 level. This resurgence adds an intriguing layer to the ongoing narrative, pointing to the cryptocurrency’s resilience among dynamic market forces.
