Bitcoin, the leading cryptocurrency, has collapsed below the $90,000 level. It is currently changing hands slightly above the $89,000 level, according to CoinGecko data.
Image by CoinGeckoIs this a healthy correction?
According to Chris Kuiper, vice president of research at Fidelity’s digital asset arm, the current on-chain metrics indicate that this could be a healthy drawdown.
Kuiper is looking at the market through the lens of on-chain behavior. Specifically, he focuses on the short-term holder MVRV ratio, which essentially measures whether recent buyers are sitting on profits or losses.
When this ratio drops sharply, it means that people who bought Bitcoin in the past few weeks are now underwater. Historically, during bull markets, this kind of situation tends to trigger a brief wave of capitulation.
What Kuiper finds significant is that the pattern forming right now closely resembles earlier drawdowns that happened within bull markets. During such periods, Bitcoin typically falls 20–30% and short-term holders get squeezed before the bull trend resumes.
Given that the broader environment hasn’t been hit by any major negative news, he sees this pullback as fitting the blueprint of a normal, healthy correction rather than the start of a major reversal. Bitcoin is so far down 30% from its record peak.
“This is not a prediction, but given the lack of negative fundamental news or changes (and in fact the opposite lately), this data tips my assessed probabilities in favor of this being a regular and healthy drawdown,” Kuiper said.
Source: https://u.today/bitcoin-nosedives-below-90k-but-bottom-might-be-close
