Bitcoin closed August on a bearish note despite recording its new all-time high within the month. Following this notable downside performance since hitting new highs, speculations about a bear market phase are becoming rampant in the community. While sentiment is leaning toward a bear market phase, on-chain metrics suggest that BTC’s bull run is still on.
Correction Hits Bitcoin, Yet Metrics Defy Cycle Top Narrative
Bitcoin has fallen sharply to the $107,000 price mark, but Carmelo Aleman, a market expert, has shared an insightful analysis in a quick-take post on the CryptoQuant platform, suggesting that the ongoing bull market cycle may be far from over. Indicators monitoring investor behavior, network activity, and long-term holder strength keep showing underlying resiliency, even as BTC’s price drops.
The expert noted that the recent drops in the price of Bitcoin have raised questions about whether we are in the midst of a healthy correction or a cycle top. However, BTC reserves on exchanges continue to decline, indicating modest selling pressure. Additionally, on-chain data continues to show hints of accumulation by long-term investors despite the pullback.
Aleman continued by highlighting that before hitting new highs, Bitcoin bull cycles have historically been characterized by periods of severe correction. Meanwhile, institutional adoption, spot ETFs, and increased interest in tokenization and DeFi provide strong foundations that could sustain future growth.
He has also pointed out several key metrics that are currently signaling underlying strength for Bitcoin. These include the Network Value to Transactions (NVT), the Market Value to Realized Value (MVRV), Miner Reserves, and the Adjusted Spent Output Profit Ratio (aSOPR).
In the case of the NVT, when the metric remains low, it may indicate that the price of BTC is low in comparison to real network activity. Aleman revealed that the metric has remained below the level 50 since July 7, which is a historic sign of strong network activity and growth.
BTC Not In An Overheated Phase
Bitcoin may have weakened in price, but it is likely that it has not reached a top for this cycle, according to the MVRV indicator. Data shows that the key levels around 3.6, which have traditionally corresponded with cycle tops and all-time highs, have not been achieved by this indicator despite prior price increases. This absence of market frenzy indicates that BTC has not yet reached an overheated stage.
Presently, the aSOPR shows that BTC is not yet in an overvaluation phase, as the metric holds slightly above the level 1. Typically, when the ratio remains above 1 for extended periods of time, it indicates that the majority of moving coins are profitable. Also, prolonged high levels frequently correspond with market exuberance and cycle tops.
As for Miner Reserves, the expert noted that these investors have only dropped by 6,000 BTC this year, staying steady at 1.805 million BTC. Miners have historically sold aggressively to lock in profits during market peaks, but this pattern has not materialized, supporting the notion that this cycle still has potential to grow. Considering these bullish signals, Aleman stated that if demand continues, growth is still possible for Bitcoin even though it has seen sharp corrections.
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