The Fidelity analyst cites signals of a market correction while Bitcoin tests $92,000

Source: Yellow Original Title: Fidelity analyst cites signs of correction in the bull market as Bitcoin tests $92,000

Original Link: https://yellow.com/es/news/analista-de-fidelity-cita-señales-de-corrección-del-mercado-alcista-mientras-el-bitcoin-prueba-los-92000

Market Context

The recent drop in Bitcoin has sparked a renewed debate over whether the market has found a local bottom, with analysts examining on-chain metrics that have historically indicated the end of mid-cycle corrections. Chris Kuiper, an executive of research at Fidelity Digital Assets, noted that several indicators now reflect patterns of previous market pullbacks, although he emphasized that no indicator offers certainty.

Key indicators to watch

• The profitability metrics for short-term holders have fallen into loss territory in a pattern resembling previous bull market corrections.
• The Bitcoin Fear and Greed Index has dropped to 11, marking levels of extreme fear typically associated with local funds.
• Analysts remain divided on whether the current technical patterns align with healthy corrections or signal additional downside risk.

Fidelity's Analysis of Historical Patterns

Kuiper, who holds the title of Vice President of Research at Fidelity Digital Assets, pointed out the MVRV ratio of short-term holders as a key indicator for assessing the current market conditions. “I, like anyone, never know for sure,” Kuiper wrote, “but a chart I like to use to help assess the probabilities is the MVRV chart of short-term holders along with their cost basis.”

The metric tracks whether recent Bitcoin buyers are holding their positions with gains or losses. When the MVRV ratio falls below 1, short-term holders are in the red on their investments. Previous bullish markets have shown local funds forming when this group briefly enters loss territory before prices recover.

The current drop has pushed this group back into losses, creating a pattern that Kuiper said resembles previous mid-cycle pullbacks. “If this is indeed a regular 20-30% drop within the current bull market, then the MVRV ratio is showing a valley similar to the previous one, testing the resistance of short-term holders before rebounding to move higher,” he wrote.

Market sentiment

Kuiper also cited the Bitcoin Fear and Greed Index, which has shifted from prolonged periods of greed and extreme greed to fear and extreme fear. The index currently stands at 11. According to Kuiper, the indicator “tends to reach extreme levels at these local peaks and troughs,” suggesting that sentiment has reset after the recent market euphoria.

He emphasized that his analysis represents an assessment of probabilities rather than a prediction. “This is not a prediction,” he warned, “but given the lack of negative fundamental news or changes ( and indeed the opposite lately ), this data tilts my assessed probabilities in favor of it being a regular and healthy drop.”

Contrasting Perspectives on Market Direction

Not all market observers share Kuiper's assessment. Max Shannon, senior research associate at Bitwise, pointed out possible obstacles including correlation with the stock market, a decrease in the likelihood of rate cuts in December, and ongoing sales by long-term holders during Bitcoin's current price discovery phase.

Shannon acknowledged the improvement in the risk-reward dynamics at current levels, adding that “the risk-return profiles are improving at these levels in my opinion. Things are tense and many contrary indicators are showing in green.”

Cryptocurrency investor Richard Haas identified technical divergences from historical bullish market patterns. He warned that “previous bullish corrections never closed more than 10% below the 200ma cloud, and never allowed the 50dma to bend downward.” The observation suggests that the current price action may differ from previous corrections.

Final considerations

The Kuiper framework focuses on the convergence of chain stress between short-term holders and sharp resets of sentiment as features of typical bullish market shakes. Whether these indicators mark a lasting bottom or simply a temporary pause before further declines remains unresolved.

As Kuiper pointed out, the analysis ultimately relies on probabilities rather than certainties. Bitcoin was trading at $91,002 at the time of the analysis.