Has Bitcoin genuinely carved out a cycle low or just staged another reflexive bounce? After briefly threatening to lose the $80,000 level and then rebounding toward $88,000, the “bottom” debate is back in full force. On-chain analytics firm Santiment has weighed in – and its answer is cautiously skeptical.
Did Bitcoin Just Print Its Cycle Low?
The firm begins by criticizing the way market labels are thrown around. “The terms ‘bull market’, ‘bear market’, ‘topped’, or ‘bottomed’ can truly mean whatever narrative a trader, investor, or community wants it to mean,” Santiment notes, pointing out that few commentators define a clear timeframe when they call a top or bottom. This opens the door to extreme confirmation bias “after the uptrend or downtrend of prices are already well established.”
Still, the recent move off sub-$80,000 levels has been enough for some to argue that forced selling is behind us. Santiment acknowledges that “content that covers whether the ‘bottom’ has been established will always get some anxious traders excited again,” but stresses that price alone is not sufficient evidence.
On sentiment, the data looks contrarian-constructive. Santiment highlights “how far traders’ optimism regarding Bitcoin (as an investment) can fall after monthly gains are no longer a guarantee.” Its social metrics show an uptick in declarations that crypto is in a bear market and a rise in bearish commentary.
“The uptick in declaration of crypto being in a bear market, and rise of bearish sentiment are both clearly great signs,” the firm writes, reminding readers that “most major turnarounds occur when retail’s hope is mainly lost.” The open question: “Is the crowd’s hopes and dreams of getting their lambos really truly gone?”
Bearish Arguments Still Predominant
Derivatives positioning adds nuance. Aggregated funding rates show meaningful short exposure, but not yet at the extremes seen after the October 6 all-time high. “When we see many shorts like this […] it often stops the downtrend in its tracks,” Santiment explains, recalling how “many shorted about a week after the October 6th all-time high, and there was a temporary relief rally in late October as a result.” For now, though, “we’re not seeing quite the level of bets against the price of Bitcoin […] just yet anyways.”
Profitability metrics paint a similar picture. Both 30-day and 365-day MVRV remain negative, indicating the average holder sits on unrealized losses. Santiment underlines that MVRV “shows the ratio between the current price and the average price of every token acquired,” and that as it rises, “more market participants become willing sellers.” With MVRV still depressed, the firm argues that “a rebound above $90K again soon wouldn’t be a major surprise at all.”
The more concerning signals come from network fundamentals and holder structure. “If we look at the overall utility of Bitcoin, however, things look a bit dicey,” Santiment warns. Weekly new addresses have fallen from over 3.37 million at a mid-December 2023 peak to about 2.21 million now. Weekly active addresses are down from more than 963,900 to roughly 729,200. That underscores “declining utility” at a time when a durable bottom would typically coincide with stabilization or re-acceleration in network use.
Even more problematic is the whale-to-retail shift. Santiment calls this “one other major elephant in the room that should bring you a bit of hesitance that ‘the bottom is in’.” Addresses holding 10–10,000 BTC “continue to shrink their collective supply held,” while wallets with less than 0.1 BTC “continue to grow theirs.”
The firm is blunt: “This is the wrong combination to mark a bottom.” Since COVID-19, “institutionals have driven up just about every bull rally,” and this 10–10,000 BTC cohort “had a lot to do with the October 6th all-time high.” Yet “by October 8th […] [they] began to flat-line their holdings, and have been shrinking them for about six weeks straight now,” while “small wallets […] are the ones scooping up dips in hopes that they ‘catch the falling knife’.”
The verdict is split across timeframes. “Overall, data points to the most likely scenario being a short-term bounce,” backed by negative MVRV and vocal retail panic. But “Bitcoin clawing its way all the way to six figures looks like a stretch when […] whale bags are continuously appearing to be in ‘sell mode’.”
Santiment concludes that “the long-term direction is still pointing to down” as long as “declining utility and declining whale and shark holdings” persist – while reminding investors that “crypto markets could be full of surprises” as the New Year approaches.
At press time, Bitcoin traded at $86,884.
Featured image created with DALL.E, chart from TradingView.com
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