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The Bitcoin market has been experiencing a phase of correction in recent weeks following its recent surge beyond $108,000. This decline has led to growing concerns among investors about whether the market is entering a prolonged cooling-off period or if this correction signifies the end of the bull cycle. However, historically, such phases have been common in Bitcoin’s market cycles, often followed by periods of renewed upward momentum. Analysts are now turning to key on-chain metrics to provide insights into the current phase and its implications for Bitcoin’s price trajectory. Related Reading: Market Alert: Bitcoin’s $81K Support Zone Could Decide Its Next Big Move Key On-Chain Indicators Reflect Market Sentiment A CryptoQuant analyst known as Avocado Onchain recently shared an analysis suggesting that the market remains within a broader bull cycle. Using on-chain indicators such as the Adjusted Spent Output Profit Ratio (SOPR), Miner Position Index (MPI), and funding rates, the analyst outlined the current state of Bitcoin. According to the report, the SOPR (7-day Simple Moving Average) remains above 1 but is trending downward, indicating reduced profit margins for sellers. This metric often acts as an early signal of market sentiment shifts, with drops below 1 historically triggering rebounds as selling pressure subsides. The report further analyzed Bitcoin’s Miner Position Index (MPI). This index measures miner behavior, particularly their tendency to sell Bitcoin in anticipation of significant market events, such as halving cycles or peak price levels. The current trend in MPI shows no significant outflows from miners to exchanges, suggesting that large mining operations are holding their Bitcoin reserves. Avocado added that this indicates confidence in the long-term value of Bitcoin, even as short-term volatility persists. However, periodic sell-offs to cover operational costs are still expected. Another important indicator highlighted by the CryptoQuant analyst is total network fees, measured using a 7-day Simple Moving Average (SMA). This metric reflects transaction activity and overall on-chain engagement. Avocado disclosed that the recent decline in network fees suggests reduced trading activity and a temporary cooling-off phase in market participation. Historically, such periods of lower transaction activity have preceded periods of renewed bullish momentum, especially when other indicators align with this trend. Bitcoin Funding Rates And Investor Sentiment Funding rates, another significant indicator in the analysis, have shown a downward trend. Funding rates represent the cost of holding long or short positions in Bitcoin futures contracts and are often used to gauge market sentiment. During bull cycles, sharp drops in funding rates have often been followed by rebounds, as bearish sentiment reaches an extreme point and buyers return to the market. Related Reading: Bitcoin Price Eyes Fresh Gains: Can Bulls Break Through? The analyst emphasized that while current on-chain data suggests a cooling-off phase rather than the end of the bull cycle, short-term price movements remain uncertain. Historically, funding rate drops have served as buying opportunities for long-term investors, particularly during periods of heightened market pessimism. Featured image created with DALL-E, Chart from TradingView