Analyzing On-Chain Metrics: Obstacles in Bitcoin’s Path to Recovery after 2022 Bear Market

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Upcoming US data releases and statements from Fed policymakers loom as potential triggers for shifts in long-term US bond yields, with implications extending to crypto and US stocks. While Bitcoin has experienced an 18% decline from its July peak, it remains up by 56% this year. Amid a relatively quiet period for its price, the crypto market anticipates substantial changes ahead.

A focal point of this anticipation revolves around Ripple’s ongoing legal battle, which could redefine cryptocurrency regulations. Although Bitcoin’s recent performance has been modest, optimism lingers for future price surges. Crypto analyst Eric Krown suggests that while immediate all-time highs might not be imminent, positive momentum could propel Bitcoin upward.

Krown’s perspective is grounded in the ongoing debate about the likelihood of new highs. Despite appearing subdued presently, the potential for Bitcoin to reach unprecedented levels remains robust, potentially materializing by late 2023 or before 2024 concludes.

Presently, charts hint at a potential downward trend, raising concerns about a dip below the $25,860 mark. A closer look at the 12-hour timeframe reveals indications of a descent below $26,170, suggesting a prevailing downward trajectory.

On-chain metrics offer a nuanced view, suggesting challenges in recovering from the 2022 bear market. Glassnode’s “Recovering from a Bitcoin Bear” dashboard outlines eight signals, of which only three currently point toward bullish trends.

A noteworthy risk stems from the holdings of short-term Bitcoin holders. CryptoQuant’s analysis reveals that losses incurred by these holders are notably lower, ranging between 4% to 9.2%, as opposed to 2019’s range of 41% to 45%.

In this evolving landscape, market sentiment hinges on a complex interplay of legal battles, macroeconomic data, and investor behavior, shaping the trajectories of cryptocurrencies and traditional assets alike.