On-Chain Indicators Raise Concerns For Bitcoin Investors

Bitcoin continues to attract the attention of investors, buoyed by bold forecasts projecting its price beyond $150,000 in the coming years. However, on-chain data reveals warning signs. According to the Bitcoin Cycle Indicator Index (IBCI), a key tool for analyzing market trends, this asset may be approaching a cycle peak. These observations raise questions about the sustainability of the current momentum and the risks of a potential correction.

On-chain indicators point to a critical zone

The Bitcoin Cycle Indicator Index (IBCI), which aggregates seven key market analysis tools, shows signs of fragility. It has reached what experts term the “distribution zone,” a threshold observed for the first time in eight months. This critical stage is often associated with an increase in sales from long-term investors, a behavior frequently observed at cycle peaks. According to Gaah, an analyst at CryptoQuant: “When the IBCI reaches 100 %, markets tend to enter correction phases that often signal the beginning of a bear market.”

Among the indicators integrated into the IBCI, the Puell Multiple remains below critical levels, providing some respite to optimistic investors. This indicator assesses the profitability of miners relative to their annual average, and its current level suggests that the market retains some room for improvement. In contrast, other tools like the Spent Output Profit Ratio (SOPR) indicate increased profit-taking, a dynamic that reflects typical behaviors during potential peak phases. These mixed signals heighten uncertainty around the bitcoin’s future trajectory.

Possible scenarios for bitcoin : hope or imminent correction ?

Despite the warning signs highlighted by on-chain indicators, some analysts believe that bitcoin still has growth potential before it may undergo a correction. Timothy Peterson, an economist specializing in the Bitcoin network, stated in a post on January 24, 2025, on the social network X (formerly Twitter) that “BTC could rise to $137,000 before falling back under six figures for a local low.” This analysis relies on a 90 % correlation with the bullish cycle of 2015-2017, a similarity that continues to fuel optimism among some investors.

However, this optimistic view is tempered by other indicators, which call for greater caution. The Bitcoin Cycle Indicator Index (IBCI), while having reached a critical zone, remains below the extreme levels observed at previous peaks. This positioning suggests that a moderate increase is still possible, but does not exclude the risk of heightened volatility in the coming months. The current situation reflects a precarious balance between cautious optimism and growing nervousness, leaving the market uncertain about its next major move.

The bitcoin market oscillates between optimistic expectations and cautionary warnings, reflecting the uncertainties of a potentially turning cycle. If the asset manages to reach new highs, it could solidify its position as a key holding in institutional portfolios. In contrast, a sharp correction could alter investors’ strategies, already sensitized by the warning signals emitted by on-chain indicators. This situation underscores the importance of rigorous risk management, as bitcoin appears to be approaching a critical phase in its evolution.