How to determine the length of Bitcoin’s market cycle: Glassnode analysts’ answer

August 14, 2022 by cryptobreak

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The length of Bitcoin’s market cycle can be calculated based on the behaviour of two main categories of investors – long-term and short-term. According to Glassnode analysts, it is they, on a large scale, that determine the global highs and lows of the BTC price. On the previous day, the experts published some interesting charts of market fundamentals, from which you can draw conclusions about the approximate date of the end of the current bear cycle in the crypto. We tell you about the details of this study in more detail.

The popularity of the question of the duration of a bearish trend and the onset of a bullish cycle is quite obvious. After all, Bitcoin set a record high of $69,000 in the first half of November 2021, followed by a prolonged market decline. Certainly, some coins set records months after the event, but that does not change the essence. Overall, the market has been in a prolonged collapse for just over nine months.

Bitcoin daily chart

And since this period brings investors and traders mostly losses, many cryptocurrency enthusiasts are expecting the decline to end and at least stabilize coin rates to accumulate further. That’s why Glassnode analysts have started making predictions about the market’s continued decline and its transition to growth.

It is important to note that other analysts have done the same before. In particular, representatives of the giant Grayscale Investment a month ago have studied possible duration of a bearish trend. They came to a conclusion that at that time the collapse would last for about 250 days. Accordingly, the start of a prolonged uptrend can be expected sometime in March 2023.

When will Bitcoin stop falling?

According to CryptoSlate sources, long-term holders of the cryptocurrency are considered to be those who hold Bitcoin in their wallet for longer than 155 days. They are often considered “smart investors” because most of them can withstand market volatility and know how to buy and sell BTC on time. Short-term holders, on the other hand, are traders who hold Bitcoin for less than 155 days and are considered to be a more price-sensitive group.

Bitcoin exchange rate over the past 2 weeks

The dependence on market dynamics and the behaviour of long-term holders can be clearly seen in the chart below. The yellow line here indicates the balance of their cryptocurrency wallets, which increases as the market falls and shrinks as it rises. At the moment, long-term holders are busy accumulating BTC, that is, they are actively buying cryptocurrency.

Dynamics of the aggregate balance of long-term BTC holders

We should note that you don't have to buy them to increase the number of coins in your own wallet. Accumulating more cryptocurrency can be helped by so-called stacking, which involves receiving rewards in a certain coin. You can read more about safe-stacking instructions in a separate article.

Another chart is the change in their positions. The screenshot below illustrates changes in the position of long-term holders, where red areas show a decrease in BTC investments, and green areas show an accumulation.

Changing positions of long-term holders

So far, market sharks have been accumulating Bitcoin in anticipation of important events. One of them is Etherium’s upcoming move to the Proof-of-Stake algorithm, which is seen by many analysts as a bullish trigger for the market, i.e. a reason for growth. Apparently, institutional investors or professionals with capital on hand have also taken notice.

According to a new survey by XRP token issuer Ripple, 76 per cent of the managers of various financial institutions surveyed plan to use the crypto over the next three years. Executives at both financial institutions and businesses understand the benefits of using cryptocurrencies internally, Cointelegraph reports. The most common reason is that crypto gives more people access to financial services, so its relevance will be huge in any market environment.

Buying cryptocurrencies by investors

We believe that cryptocurrency market cycles are really driven by the behaviour of large long-term investors, who are able to accumulate coins even now - after a 70-90 per cent market crash. The more crypto they have at their disposal, the less niche sellers will push rates down. Well, this will predictably create the conditions for further market stabilisation and the onset of a new bull run.