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Bitcoin’s price has experienced significant fluctuations recently, raising an important question among traders: Is the current decline the start of a long bear market, or merely a standard market correction? Data reflecting the current profit-loss ratio can assist investors in finding the answer to this crucial question. According to CryptoQuant analyst Crypto Dan, it seems more likely that the current situation is a typical correction rather than the beginning of a major bear cycle. The limited nature of the previous rise indicates that the market is not overheating and that the risk of decline remains lower.
Identifying Bear Cycles in Bitcoin
Prior to a bear cycle, Bitcoin 
$104,014 prices typically surge rapidly and sharply, resulting in a significant increase in traders’ net profit margins. However, when prices fall below the average cost level of market participants (the realized price), net profit margins can drop sharply and deeply. According to Crypto Dan’s analysis, in such cases, investors may be forced to sell their BTC holdings at a loss, creating selling pressure that drives prices down further. This situation is clearly illustrated in the graphs with red boxes.
One of the most prominent features of a bear cycle is the prolonged struggle for the market to recover. While investors’ profit margins remain low, the loss of confidence results in limited new purchases, steering the market into a long-term downtrend.
Typical Correction Periods for Bitcoin
In standard market corrections, although the process is somewhat similar, the magnitude is much more limited. During these periods, the extent of the previous rise in Bitcoin’s price is relatively lower, resulting in a milder increase in profit margins followed by a decline compared to a bear market. These phases, indicated by green boxes in the graphs, show a much lighter drop in net profit margins, allowing investors to quickly adapt to market conditions.
Crypto Dan emphasized that in the current market conditions, the recent surge has been limited, and the potential risks are under control. According to the analyst, investors can monitor the situation more cautiously without panicking.
