A critical on chain signal suggests that Bitcoin may still face additional downside before forming a lasting bottom.
Bitcoin has seen a short period of relief this week after climbing back above 72000 dollars. However, weak demand and continued investor exits indicate that the asset could come under renewed pressure.
Joao Wedson, founder of Alphractal, highlighted an on chain indicator that points to the possibility of one more decline before the market reaches a cycle low.
A Final Shakeout Phase
Wedson’s analysis, powered by Alpha AI insights, examines the relationship between Investor Price and the Long Term Holder Realized Price. When Investor Price falls below the Long Term Holder Realized Price, it signals a meaningful structural shift in the market, especially in terms of who is shaping Bitcoin’s overall cost basis.
This crossover reflects weakening confidence among newer and more active participants. Investor Price represents the average cost of coins currently in circulation, capturing the behavior of short term holders. When it drops below the Long Term Holder Realized Price, it shows that these investors are willing to sell at levels lower than what long term holders originally paid. This situation often appears after distribution phases when demand begins to fade and marginal buyers step away.
At the same time, long term holders begin to take greater control of the market. Historical patterns show that these participants are less likely to sell when prices approach or fall below their cost basis. As a result, market control gradually shifts from speculative traders to more conviction driven holders. This transition can reduce volatility but also slows upward momentum, keeping price action relatively subdued.
Importantly, this stage is not typically driven by panic selling. Instead, it reflects a rotation of capital where weaker participants exit while stronger holders steadily absorb supply. This process tends to unfold gradually and often results in extended sideways movement or mild declines as the market builds an accumulation range.
Limited Upside in the Short Term
Another effect of this structure is reduced upside potential. Wedson noted that as long as Investor Price remains below the Long Term Holder Realized Price, any upward movement is likely to face selling pressure from investors trying to exit near their breakeven levels.
Looking at the broader cycle, this pattern has historically appeared during mid cycle corrections rather than at the final bottom. It reflects a market that is working through previous excesses, rebuilding its cost structure, and redistributing supply into stronger hands. A more decisive shift in trend is usually confirmed only when Investor Price rises back above the Long Term Holder Realized Price, signaling renewed risk appetite and the potential for stronger upward momentum.#crypto#cryptonews https://coinsignals.net https://t.me/coinsignalpublic
