The trigger point for the "Cycle of Bull to Bear"
During an internal seminar at the institution, the boss asked me: How likely do you think it is that BTC will enter a deep bear market this time? Although I mentioned some personal opinions, I knew they contained my subjective wishes. After the meeting, I kept thinking about how to explain this issue with objective logic and data.
I think "investor price sensitivity" can be one basis. Its core is to quantify the "psychological pressure" or the "degree of pain" experienced by different investor groups when the BTC price falls, i.e., the price sensitivity.
It presents a cyclical pattern spanning more than a decade and clearly reveals the key triggering factors that led BTC to eventually fall into a deep bear market during past cycles - whenever the price sensitivity of Long-Term Holders (LTH) (blue line) exceeds that of Short-Term Holders (STH) (red line) and continues to rise, it means the probability of entering a deep bear market soars (as shown in the figure).
So, by carefully observing the evolution of past cycles in the figure, it is not difficult to find that there seems to be such a process:
1. At first, it is just a normal correction in a bull market, during which only the STH sensitivity increases, the red line rises alone, and LTH experiences almost no loss, with price sensitivity at zero.
2. Subsequently, as the price drops, the red line reaches a certain threshold and then decreases instead of rising, indicating that the trapped positions at high levels begin to cut losses and exit the market, causing a decrease in short-term cost basis and thus leading to a decrease in sensitivity.
3. Finally, as more LTHs who entered at high levels become more sensitive to price, the blue line exceeding the red line indicates that the market has already stepped one foot into the deep bear market.
Back to the current situation...
The blue line has already begun to rise, but it has not exceeded the red line, indicating that the current decline is still mainly due to short-term investors being more sensitive to price. A similar situation occurred in August 2024, but not in April 2025, indicating that August 2024 felt more like a "bear market" emotionally, although the correction was not deep, but the time span was very long (7 months).
Of course, compared to the past, at least the current LTH sensitivity has not reached a level of imminent crisis (the curve has been smoothed using relative market value), but it is an undeniable fact that risk is rising. So under what conditions will the probability of "risk" turning into a "crisis" rise rapidly?
$BTC #加密市场观察
{future}(BTCUSDT)
