Crypto Analytics Firm Warns of Bitcoin’s Potential Bear Market: Outlines Three Scenarios
In a recent statement, Alphractal, a cryptocurrency analytics firm, has expressed concerns about Bitcoin’s current state, suggesting that the leading cryptocurrency may be heading into a bear market.
Alphractal highlighted the significance of Bitcoin’s Spent Output Profit Ratio (SOPR) Trend Signal, a proprietary metric, in understanding market trends over the years. To filter out market noise and provide clear entry and exit signals, Alphractal’s analysis combines SOPR with exponential and simple moving averages (EMA and MA). The firm stated that this combination has been instrumental in identifying market cycles since 2015, revealing that bull markets tend to be shorter in duration, while bear markets are more prolonged.
The analytics company identified an unusual pattern in the data for 2024. According to Alphractal, only one SOPR signal has breached the critical level of 1.015, which typically indicates an extended bear market. This deviates from previous cycles where two signals were required to confirm the bearish phase. The report suggests three potential scenarios based on the current SOPR pullback:
1. All-Time High: Bitcoin could potentially reach a new record price similar to its peak in November 2021. However, recent data suggests a reversal into a bear market.
2. Bear Market Already in Progress: If a second SOPR signal does not occur, the bear market could commence as early as March 2024.
3. Optimistic Reaccumulation: The metric could rebound, indicating a reaccumulation phase reminiscent of 2019-2020. This scenario could potentially push Bitcoin to new all-time highs, but it may take several months to unfold.
Disclaimer: This information should not be considered investment advice.
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