Analyst: Bitcoin Exhibits Supply Structure Resembling Cycle Bottom, But Key Sell Pressure Indicator Yet to Signal Bottom

BlockBeats News, June 22nd: Cryptocurrency market analyst Axel Adler Jr. stated that on-chain data shows Bitcoin's market is exhibiting a supply structure similar to a cycle bottom, but a key surrender indicator has not yet confirmed the bottom formation.

The supply held by long-term holders is increasing. This metric measures the total supply held by the long-term holder group, which has historically surged rapidly near cycle bottoms. Currently, this metric is around 12.17 million BTC, reaching a recent local high of 12.42 million BTC in early June. Despite a slight retreat thereafter, it still shows strong year-over-year growth. Over the past year, this metric has more than doubled, indicating that more and more chips are transitioning from short-term traders to more stable long-term holders.

This shift is usually seen as a sign of increased market resilience. An increase in the supply held by long-term holders means more Bitcoin is moving out of active circulation, reducing selling pressure potential and indicating the market is undergoing chip consolidation.

However, the issue lies in the fact that this metric has not yet reached the levels near past bear market bottoms. Near the 2015 bottom, the supply held by long-term holders was around 15 million BTC; at the 2018-19 bottom, it was around 16 million BTC; and at the 2022-23 bottom, it was close to 19.7 million BTC. In comparison, the current 12.17 million BTC, while pointing in the right direction, still has a gap to fill to reach the historical bottom confirmation range.

A bigger discrepancy comes from the selling pressure indicator. This indicator only activates when the overall market is in a loss, i.e., when NUPL is negative, and measures the extent to which realized loss pressure deviates from 1 through SOPR. In other words, it captures the moment when the market truly enters the pressure release, loss-sale, and surrender stage.

Currently, this indicator has been silent for 1,256 days, the longest in Bitcoin's history. The last signal appeared on January 13, 2023, at the end of the previous bear market cycle. In the past few cycles, including 2015, 2018-19, 2020, and 2022, intense selling pressure signals occurred, with peaks usually ranging from 15% to almost 32%. In December 2018, at the cycle bottom, this indicator reached a historical high of about 32%.

Therefore, the current market presents an incomplete bottom structure: the supply side is maturing, long-term holders are absorbing chips, but the surrender side has not provided confirmation. The market looks more like it is in a holding, consolidation, and chip redistribution phase, rather than having completed the final pressure release of a classic cycle bottom.

The conclusion is that Bitcoin does indeed exhibit some "bottoming" characteristics, but it still lacks the most critical part of the historical cycle: the ultimate surrender signal brought about by loss selling. A stronger confirmation may require one of two conditions to occur: the supply held by long-term holders further rising to over 15 million BTC or the selling pressure indicator reactivating to show the market has truly undergone pressure release.