The price of Bitcoin (BTC) has entered a correction phase after the asset rose to the $44,000 level and beyond.
A weekly report from on-chain analytics platform CryptoQuant found that several valuation metrics indicate that the leading digital asset is facing a correction as its price has risen too quickly.
BTC in correction phase
One of the metrics is CryptoQuant's bull-bear market cycle indicator, which has entered the red zone for the third time this year. Historically, crypto asset prices experienced a correction in the last two periods and the indicator entered the overheated bull phase.
Another key figure is the Bitcoin supply’s percentage of profits. On-chain data shows that 90% of BTC in circulation is making gains, and according to previous sources, the current phase marks the beginning of a price correction.
Additionally, the crypto market is facing selling pressure from both short- and long-term holders, whales, and miners. Short-term holders began dumping their assets at high profit margins, while longer-term holders sold their assets as prices rose above $40,000. Average rest data showed that six-month-old Bitcoins were issued before the asset's price fell.
Bear market in the past
Additionally, Bitcoin miners dumped more coins as BTC rose to $44,000, selling their assets with an average profit margin of 40%. This is evident in the high miner churn rates in recent days.
Miners are believed to be taking advantage of the higher prices by selling some of their holdings as the value of block rewards has grown faster than the difficulty of mining. They are also gathering resources to prepare for the upcoming Bitcoin halving, which is expected to cut block rewards by 50% and reduce the number of BTC produced daily.
Nevertheless, CryptoQuant says that the bear market is a thing of the past and BTC has entered the bullish phase, although the cryptocurrency has fallen about 10% since its last peak. Data from CoinMarketCap shows that BTC is up 4% in the last 24 hours and is trading at $42,700 at the time of writing.
Meanwhile, crypto market liquidity conditions are improving as the market capitalization of stablecoins increases. The market cap of Tether (USDT), the largest market, has reached new highs at over $90 billion. According to data from DefiLlama, the total market capitalization of stablecoins has also increased to $129.19 billion.
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