Bitcoin's recent decline has prompted renewed debate over whether the market has found a local bottom, with analysts examining on-chain metrics that historically have signaled the end of mid-cycle corrections. Chris Kuiper, a research executive at Fidelity Digital Assets, said several indicators now mirror patterns from earlier bull-market pullbacks, though he stressed that no metric offers certainty.
What to Know:
- Short-term holder profitability metrics have dropped into loss territory in a pattern resembling previous bull-market corrections
- The Bitcoin Fear & Greed Index has fallen to 11, marking extreme fear levels typically associated with local bottoms
- Analysts remain divided on whether current technical patterns align with healthy corrections or signal further downside risk
Fidelity Analyst Examines Historical Patterns
Kuiper, who holds the title of vice president of research at Fidelity Digital Assets, pointed to the short-term holder MVRV ratio as a key gauge for assessing current market conditions. "I as well as anyone never knows for sure," Kuiper wrote on X, "but one chart I do like to use to help gauge the probabilities is the short-term holder MVRV chart along with their cost basis."
The metric tracks whether recent Bitcoin buyers hold their positions at a profit or loss. When the MVRV ratio falls below 1, short-term holders are underwater on their investments. Previous bull markets have shown local bottoms forming when this cohort briefly enters loss territory before prices recover.
A Glassnode chart Kuiper shared tracks Bitcoin's price against the realized price of short-term holders and their MVRV ratio.
The current drawdown has pushed this group back into losses, creating a pattern Kuiper said resembles earlier mid-cycle pullbacks. "If this indeed is a regular 20–30% drawdown within the current bull market, then the MVRV ratio is showing a similar valley as before, testing the mettle of short-term holders before resetting to move higher," he wrote.
Kuiper also cited the Bitcoin Fear & Greed Index, which has swung from prolonged periods of greed and extreme greed into fear and extreme fear.
The index currently sits at 11. According to Kuiper, the indicator "tends to hit extreme levels at these local tops and bottoms," suggesting sentiment has reset following recent market euphoria.
He emphasized his analysis represents probability assessment rather than prediction.
"This is not a prediction," he cautioned, "but given the lack of negative fundamental news or changes (and in fact the opposite lately), this data tips my assessed probabilities in favor of this being a regular and healthy drawdown."
Contrasting Views on Market Direction
Not all market observers share Kuiper's assessment. Max Shannon, senior research associate at Bitwise, flagged potential headwinds including equity market correlation, reduced probability of December rate cuts, and continued selling by long-term holders during Bitcoin's current price discovery phase. "Further possible downside re. correlation to equity markets, lower Dec rate cut prob., LTH continue selling in BTCs 'IPO moment,'" Shannon wrote.
Shannon acknowledged improving risk-reward dynamics at current levels.
He added that "risk-return profiles [are] improving at these levels imo. Things are stretched and lots of contrarian indicators flashing green."
Crypto investor Richard Haas identified technical divergences from historical bull-market patterns. He warned that "prior bull corrections never closed more than 10% below the 200ma cloud, and never let the 50dma curl down." The observation suggests current price action may differ from previous corrections.
Final Thoughts
Kuiper's framework centers on the convergence of on-chain stress among short-term holders and sharp sentiment resets as characteristics of typical bull-market shakeouts. Whether these indicators mark a durable bottom or merely a temporary pause before additional declines remains unresolved.
As Kuiper noted, the analysis ultimately rests on probabilities rather than certainties.
Bitcoin traded at $91,002 at press time.