According to CryptoPotato, the price of bitcoin (BTC) has entered a correction phase following its rally to and beyond the $44,000 mark. A weekly report from on-chain analytics platform CryptoQuant revealed that several valuation metrics show the leading digital asset is due for a correction as its price has increased too fast. One of the metrics is CryptoQuant’s Bull-Bear Market Cycle Indicator, which has entered the red area for the third time this year. Historically, crypto asset prices have witnessed a correction for the past two periods, and the indicator moved into the overheated bull phase.
Another metric is the percentage of Bitcoin supply in profit. On-chain data shows that 90% of circulating BTC is in profit, and according to previous circles, the current phase marks the start of a price correction. In addition, the crypto market has witnessed selling pressure from both short and long-term holders, whales, and miners. Short-term holders started to offload their assets at high profit margins, while longer-term holders sold theirs as prices soared above $40,000. Average dormancy data revealed that six-month-old bitcoins were spent before the asset’s price fell.
Furthermore, Bitcoin miners offloaded more coins when BTC surged to $44,000, selling their assets at an average profit margin of 40%. This is evident in the high miner outflow levels witnessed in the past few days. It is believed that miners are taking advantage of higher prices by selling a portion of their holdings because the value of block rewards has grown faster than the mining difficulty. They are also gathering resources in preparation for the upcoming Bitcoin halving event, which is set to slash the block rewards by 50%, diminishing the number of BTC produced daily. Nevertheless, CryptoQuant says the bear market is in the past, and BTC has moved into a bull phase, even though the cryptocurrency has fallen about 10% from its latest peak. Data from CoinMarketCap shows that BTC has spiked 4% in the last 24 hours and is trading at $42,700 at writing time. Meanwhile, crypto market liquidity conditions are improving as the market cap of stablecoins is on the rise. The market cap of Tether (USDT), which is the largest, has recorded new highs, soaring past $90 billion. The total stablecoin market cap has also increased to $129.19 billion, per data from DefiLlama.
