Momentum indicators and on-chain KPI.
After falling to the 'death cross' on April 7, Bitcoin has now broken through all key moving averages. Its performance after this will provide some key insights, allowing us to judge whether we are entering the long-awaited long-term bull market cycle or if the long-term downtrend will continue.
We expect Bitcoin's price to still pull back at some point. At that time, Bitcoin is expected to drop to a low slightly above the previous low (breaking $76,000), and if Bitcoin drops to a lower low (below $76,000), we expect support above $70,000. If the support level holds, the bull market will continue. If it breaks below $70,000, this will further confirm that Bitcoin is in a left-side cycle, and the downtrend will persist.
If Bitcoin's price breaks above $95,000 and stabilizes, it will set a new historical high.
To assess how the next market movement will unfold, we delve into Bitcoin's KPI data to see if we can find clues to predict Bitcoin's next steps.
ETF inflows.
In February and March, there was a net outflow of $3.8 billion from Bitcoin spot ETFs, with another $600 million outflow in the first three weeks of April. However, on April 22, there was a significant reversal, with a net inflow exceeding $1.54 billion, marking the largest single-day net inflow since Trump took office. We are watching whether this trend can be sustained, as without participation from the U.S. market and ETF inflows, Bitcoin cannot return to historical highs.
Spot trading volume.
In April, Bitcoin's average daily trading volume was $8.7 billion, comparable to the level at the beginning of the bull market in early 2023. During the rebound on April 22, trading volume reached $13 billion, but still less than half of the trading volume on high volatility days. Additionally, compared to November and December of last year, the average number of active addresses in April decreased by 22%.
That said, investors should recognize that Bitcoin and the cryptocurrency market are generally reflexive. Prices often fluctuate first, followed by changes in on-chain activity, so on-chain activity can change quite abruptly.
Short-term holders are selling.
As shown in the chart above, Bitcoin has reached the cost basis for short-term holders ($92,500). This is a key support level, consistent with Bitcoin's key moving averages.
Long-term holders create support and lay the groundwork for new historical highs, but short-term holders bear the main responsibility for fluctuations in the later stages of the cycle. Therefore, we are closely monitoring the on-chain behavior of this group, as their positions are recovering and becoming profitable.
Since early February, short-term holders' Bitcoin holdings have decreased by 11.4%. In the chart below, we can see a significant increase in the amount transferred to exchanges on April 22 and 23, totaling $4.4 billion. This is not a good sign, as it indicates that 'paper hands' are selling. This situation is similar to the early stage of the bear market in March 2022, when Bitcoin prices briefly rebounded to the cost basis for short-term holders (which had previously sold from a high of $69,000). Therefore, this is a signal indicating that the bear market may persist until the end of this year.
Long-term holders are still buying.
Can long-term holders withstand the selling pressure from 'paper hands'? In the chart below, we can see that long-term holders are returning to the market as buyers. They currently control 69% of the Bitcoin supply in the market, up from a low of 66% on February 1, 2025.
Looking back at history, the changes in the long-term holders' share of Bitcoin holdings are as follows:
At the peak of the 2017 bull market, the share of Bitcoin supply held by long-term holders was 51.6%;
At the trough of the 2018 bear market, the share of Bitcoin supply held by long-term holders was 67.3%;
At the peak of the 2021 bull market, the share of Bitcoin supply held by long-term holders was 69% (second peak), while in the first peak period, this ratio was 58.9%;
At the trough of the 2022 bear market, the share of Bitcoin supply held by long-term holders was 69.5%;
At the peak in December 2024, the share of Bitcoin supply held by long-term holders was 67.3%.
In this regard, our interpretation is that the current increase in the concentration of long-term holders is laying a solid foundation for the market. That said, we believe this data is always influenced by ETFs, as many retail investors are purchasing Bitcoin through ETFs.
Ratio of long-term holders to short-term holders' supply.
Clearly, short-term holders are selling their Bitcoin to long-term holders. In the chart below, we can see that as prices peaked from last December to this January, this ratio seems to have bottomed out.
This is concerning as it typically marks the (regional) peak of the cycle, such as in December 2017, April 2021, March 2024, and December 2024.
That said, Bitcoin indeed experienced a 'double top' in the last cycle, primarily driven by long-term holders. The ratio bottomed out during the first peak in March 2021 and peaked during the second peak in November 2021 (the second peak driven by long-term holders).
There is also a possibility that such a situation will occur this year; if so, Bitcoin's second peak could be in the range of $110,000 to $130,000.
USDT supply has not significantly increased.
Bitcoin's price tends to increase proportionally with the growth of USDT's circulating supply (and its dominance).
Notably, since mid-December last year, USDT's supply has hovered around $140 billion. Meanwhile, USDC's supply is increasing (up 47% since mid-December last year). This is similar to the previous cycle, where USDC's supply increased significantly during the bear market and then fell back at the end of the third quarter of 2022.
Funding rates.
As short positions bet that Bitcoin will drop around $94,000, the funding rate for Bitcoin fell to negative values on April 22. To maintain their positions, shorts have paid the highest amount since August 2023. This indicates the stance of traders and speculators, but a short squeeze may also occur, potentially pushing Bitcoin's price above $100,000 in the short term.
MVRV-Z score analysis.
Bitcoin's MVRV-Z score is currently at 2.2. This analysis standardizes data across different time periods and market conditions using z-scores. A z-score of 2.2 indicates that BTC's current trading price is 2.2 standard deviations above its average. Since January 1, 2017, it has been below this level 70% of the time and above it 30% of the time.
We analyzed periods when the MVRV-Z score fell below 2 during upward trends and isolated examples where it fell below that level for the third time or more within 18 months (as we see now). Here are the returns during these periods.
All 12-month returns in the above examples were negative. For completeness, we have included all cases where the MVRV exceeded 2 since January 1, 2017:
1-month average return: 10.34%, with 53% of cases yielding positive returns.
3-month average return: 34.25%, with 55% of cases yielding positive returns.
6-month average return: 59.83%, with 53% of cases yielding positive returns.
12-month average return: 191% (84% if excluding the case from January 7, 2017), but only 33% of cases yielded positive returns.
In general, buying when the MVRV-Z score breaks 2 can yield substantial returns, but historically these results typically appear in the early stages of the cycle (early 2017, late 2020).
Summary: The bull market trend remains unclear.
Over the past three months, on-chain activity has been declining. Not only Bitcoin but Ethereum and Solana have also experienced this.
In the chart below, we can see that the Asia-Pacific region/China is the dominant factor behind most of the volatility this week, although there was a significant inflow into ETFs on April 22 (Tuesday) (not included in the chart below). This is a positive signal, but we strongly believe that without strong participation from the U.S. market, Bitcoin cannot restore its bull market structure.
The growth of stablecoins is beginning to weaken, with USDT supply hovering around $140 billion for the past four months. In the past, we found a correlation between the slowdown in USDT stablecoin supply growth and BTC's consolidation period.
The ratio of long-term holders to short-term holders is a key focus. As mentioned earlier, long-term holders often lay the foundation for Bitcoin's price movements, but strong entry from short-term holders is needed to push the price to new historic highs, which is currently difficult to observe. A longer consolidation period will create a healthier environment for a new wave of capital inflow into Bitcoin.
MVRV-Z score analysis shows that short-term return results are mixed, but the outlook for the next two to three years will be more positive. We tend to buy when the Bitcoin score approaches 1 rather than now.
We acknowledge that our analysis is based on the past, and investors should understand that due to the reflexivity of the cryptocurrency market (prices often move first, driving narratives and on-chain activity), the market is ever-changing. Finally, please note that our on-chain data analysis does not include centralized exchange ETFs or Bitcoin (which account for about 18.7% of the supply).
The short-term market will face a downturn.
As global capital withdraws from the U.S. market, discussions about 'Bitcoin decoupling' have been abundant. We do not endorse this notion, not because we don't believe Bitcoin won't 'decouple', but because, in fact, Bitcoin and the Nasdaq index are generally uncorrelated (since January 1, 2017, the average correlation coefficient is 0.22, with a median of 0.23).
That said, the correlation between Bitcoin and the Nasdaq index has risen this year (0.47), and when the Nasdaq index is under pressure, the correlation tends to increase (since 2017, when the Nasdaq index falls by 2% or more, the correlation jumps to 0.4). This situation may not change yet, as the Nasdaq index will continue to decline.
Despite continuous withdrawals from risk assets, the market is still trading at a forward earnings price of 19 times. Here are the comparisons with the lows of the past four major corrections:
Bear Market of 2022: 15 times. Equivalent to the S&P index today at 4,248 points.
COVID-19: 13 times. Equivalent to the S&P index today at 3,682 points.
Financial Crisis: 17.1 times. Equivalent to the S&P 500 index today at 4,815 points.
Internet Bubble: 20 times. Equivalent to the S&P 500 index today at 5,665 points.
Analysts lowered earnings expectations by 2.2% during the COVID-19 pandemic, by 4.2% during the bear market of 2022, by 64% during the global financial crisis, and by 38% during the collapse of the internet bubble. However, as of now, earnings expectations have only been lowered by 0.3%.
But the situation in the U.S. is not better than before:
The number of early layoffs in the U.S. has exceeded levels seen during the financial crisis (mainly government layoffs), and this has not yet reflected in labor market data.
Surveys show that soft data such as the Philadelphia Fed Manufacturing Index, new housing starts, Philadelphia Fed new orders, container ship bookings, and trade at the Port of Los Angeles are all showing weakness.
The Atlanta Fed predicts negative growth in the first quarter.
The U.S. Federal Reserve remains inactive (the likelihood of a rate cut in May is 5%);
Tariff negotiations are complex and will take longer than the market expects, potentially exacerbating tensions and escalating rhetoric.
In summary, we believe the Trump administration is doing everything possible to gradually suppress the stock market (to lower the dollar and interest rates), and the economy may have already suffered severe damage. Therefore, we believe the next downturn may come when hard data starts to be published.
However, on the other hand, if the following conditions are met, the market may smoothly navigate through uncertainty:
Tariff agreements are progressing faster than expected;
The bond market remains stable, with no serious issues;
The Trump administration has successfully shifted the market's attention to tax cuts and deregulation they are currently pushing forward.
The long-term outlook for Bitcoin remains optimistic.
However, in the long run, the outlook for Bitcoin and the entire cryptocurrency market is very optimistic.
The U.S. budget deficit is growing, not slowing down. With Elon Musk announcing he will leave the White House in May, the government efficiency part (DOGE) is clearly just a political farce, targeting only small fry.
The Treasury may continue to play a significant role in providing liquidity, not just in the U.S. (as we have seen in recent years), but Europe is also ramping up fiscal spending to cover expenses for defense and infrastructure. We believe the Federal Reserve will start expanding its balance sheet again in the third/fourth quarter.
As the situation gradually clarifies, we expect there will be monetary suppression/yield curve control globally, and inflation will also rise. In this environment, investors will prefer non-sovereign hard currencies like gold and Bitcoin over stocks.
Risk management and conclusion.
We prefer to wait for the 'big pie' to drop in the market, and we are more than happy to hold cash until we see them.
Buying Bitcoin and other assets (like SOL) at the 2022 lows was a dropped 'big pie'. Increasing investments in Bitcoin (including allocating to Meme) before the expected victory of Trump in September last year was also a 'big pie'. We also believe that changing the portfolio to be cash-heavy from December to January last year was a 'big pie'. (Odaily note: Bitcoin broke through $100,000 and set a new historical high in January 2025, then fell.)
So, is now a 'big pie' opportunity to buy the dip in cryptocurrency? For us, the answer is no. While we remain optimistic about Bitcoin's long-term trajectory, we also like to keep it simple.
If you believe we are in a structural reset of the global trade and monetary system (which we do), then you can ignore Trump’s remarks and try to find buy signals amid the noise from people like Bessenet. However, we think it will take a long time to see results, and at present, we haven't even endured the end of the first game.
The U.S. Federal Reserve is currently inactive, so we can comfortably hold long-term Bitcoin while maintaining ample cash reserves. Doing so might cause us to miss some upside opportunities in the short term, but we don't mind.
Everyone needs to act within their comfort zone and risk tolerance. Cash is also a position, and given the ample opportunities in the cryptocurrency space, we can remain patient.