Despite the recent surge in BTC’s price to the $38,000 mark, Bitfinex suggests that this upward trend may be temporary, as on-chain metrics indicate the possibility of a retracement to the $31,000 range.
A crucial indicator in the report presented by Bitfinex is the Short-Term Holder Realized Price (STH RP), representing the average purchase price by investors who have held the asset for 155 days or less.
Currently, BTC is hovering around $37,000, while the STH RP is at $30,380, marking the widest gap between the two since April 10, 2022.
It’s worth noting that historically, a monthly change in STH RP reaching a threshold of $2,000 is considered a sign of a local peak, typically following the recovery phase in bear markets.
Bitcoin Experiences a Local Peak and Could Retract
The report emphasizes that, in the current circumstances, where there is a positive monthly change in STH RP and a negative shift in the Long-Term Holder Realized Price (LTH RP), it might suggest that the price of BTC has reached a local peak, and a retracement is expected to test the STH RP level.
This dynamic is significant, as the market witnessed the liquidation of investments by both short and long-term investors, with approximately $491 million liquidated during the recent rise in BTC, the highest figure since the flash crash on August 17.
Despite an impressive price performance throughout the year, with Bitcoin approaching the $38,000 mark for the first time since May 2022, the exchange emphasizes the importance of analyzing BTC’s potential next move through past cycles.
Meanwhile, BTC’s market capitalization is approaching the $750 billion mark, a highly significant figure signaling the recovery of the leading asset in the crypto market.
Bitfinex Alpha has been closely monitoring the market since December 2022, and while there have been discussions about the possibility of a new bull market or the end of a bearish phase, they conclude with a call for caution amid the current market conditions.