Analysis: The Logic of BTC's Periodic Recovery Remains Unshaken, Losses and Panic Have Been Fully Released

On November 8, market analyst Murphy published an article discussing whether "BTC will return to a bear market." He cited the realized profit-loss ratio momentum (RPLR-M), indicating that this metric helps identify trend turning points by observing periods of accelerated profit-loss ratios under real terms. From a long-term perspective, the most valuable references are how long the red or green zones last, whether the peak of the upper green line is decreasing, and whether the trough of the lower red line is narrowing. Typically, the lowest trough of the red line occurs at the beginning of a bear market, indicating that losses are accelerating. Subsequently, prices may reach new lows, but the trough begins to narrow, suggesting that a new round of declines is unable to trigger the same scale of panic selling until it ultimately "turns green." This process constitutes a complete bear market cycle. From 2018 to 2019, this process lasted about 14 months, and from 2021 to 2023, it lasted about 13 months, while the current cycle has lasted about 11 months. Based on the duration and the performance of the red line trough narrowing since its initial bottom, it has experienced a sufficiently long period of losses and panic, meeting the criteria for a periodic bear market.

Murphy emphasized that in the past, whenever it "turned green" and entered Zone B, there has never been a precedent for returning to Zone A and starting another bear market cycle. Although Zone B occasionally experiences intermittent "turning red," it usually lasts for a short time and is accompanied by a decrease in the peak of the green line, indicating a decline in profit acceleration. Therefore, analysts are not overly pessimistic about concerns that a crash in the U.S. stock market will cause BTC to reach new lows.

The analyst also pointed out that the current correlation between BTC and the U.S. stock market has reached 0.8, close to the high point since 2020. According to the principle of mean reversion, after reaching a certain threshold, the correlation often tends to decline. If the long-term trend is simply "U.S. stocks rise, BTC falls; U.S. stocks fall, BTC also falls," how can long-term holders continue to hold about 14 million BTC instead of converting them all into U.S. stocks? This logic does not hold in the long run. Rome was not built in a day; despite the ups and downs, each release of panic, turnover of chips, and restoration of confidence accumulates strength for the next stage of the trend. Of course, historical patterns do not guarantee that the future will necessarily repeat, and macro uncertainties still exist. BTC may also experience unexpected volatility, but at least based on the current data, there is no evidence sufficient to overturn this round of periodic recovery.

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