Bitcoin (BTC) Market Correction Mirrors Past Trends, Will There Be Another Big Increase After This Dip?

Renowned analytical platform CryptoQuant recently shared data regarding Bitcoin Supply in Profit, which would ultimately contribute to understanding the market

CryptoQuant, a renowned analytical platform, recently shared data on Bitcoin Supply in Profit, a key metric for understanding market conditions. It indicates the proportion of the total circulating BTC supply that is currently profitable.

According to a recent post by the platform on Medium, using the long-term moving average (1,500 DMA) and the standard error (±1SD), CryptoQuant identifies patterns in the Bitcoin market that correspond to an approximate four-year cycle.

Analysis of Supply in Profit shows that when the indicator crosses the +1 SD band (85-95%), it typically indicates a major bull market. However, this indicator has rarely sustained levels above 90% in historical periods, especially during bearish market conditions.

For instance, during the 2017 bull market run, the Supply in Profit under consideration underwent deep corrections as it rose toward the 1,500 DMA. On average, these corrections were in the range of -33.4%, -39.6%, and -40%.

Bitcoin Corrections Follow Past Trends

Similarly, the 2021 bull market experienced a -31% correction before peaking later that year. During these deep corrections, the Supply in Profit was found to have some support at the +0.4 SD level of the 1,500 DMA.

In the current cycle, a sharp -23.4% correction occurred early May, bringing the index to test the +0.4 SD threshold. Another -16% correction recently brought the indicator back down to this critical support level. This cycle pattern aligns with past trends, suggesting that the market may still be in a bull phase.

Based on the analysis, CryptoQuant suggests that the bull market phase, relative to previous cycles, could continue for at least two more months. This insight sparks a burning question in the Bitcoin community: Will there be another big green candle after this correction? If the Supply in Profit falls below the +0.4 SD and the stock returns are close to 1,500 DMA, that is considered to be the start of a bear market.

As Bitcoin community members eagerly await the next market trend, which could either bring recovery or mark the beginning of a bear market, analysis like that provided by CryptoQuant offers a data-driven perspective to navigate the inherent uncertainty of investing in cryptocurrency.

Supply in Profit, as presented by CryptoQuant, provides a holistic view of the state of Bitcoin’s market. And so, given the historical trends and current trajectories, investors keep a close watch on whether Bitcoin will continue its bullish bull market behavior or transition into a bear market.

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