Matrixport observes that Bitcoin's on-chain health is showing signs of improvement following a period of stress in the fourth quarter. While downside risks appear to be fading, the firm notes that limited new capital inflows suggest that any upside potential may be capped, advocating for selective, low-leverage exposure.
The cryptocurrency analytics firm Matrixport has indicated that Bitcoin's (BTC) on-chain structure has begun to recover after experiencing stress during the fourth quarter of 2024. This assessment comes from the company's latest market analysis.
Market Outlook and Structural Supports
Matrixport suggests that the market outlook is becoming more constructive, provided that prices can remain above critical structural support levels. The firm reported that various valuation and positioning indicators have stabilized, which suggests that downside risks have diminished. This stabilization indicates the market is moving out of a fragile phase rather than heading towards a new sharp decline.
Obstacles to Recovery and Capital Inflows
Despite the positive signs, significant obstacles to a full recovery persist, according to Matrixport's analysis. The firm pointed out that limited new capital inflows into the market, coupled with a lack of apparent urgency among long-term investors, are currently constraining upward momentum.
Matrixport stated that strong breakouts are unlikely to be sustainable without the infusion of fresh capital into the market.
Recommended Strategy
In its overall assessment, Matrixport recommended a measured and selective approach to market positioning. The firm advised against aggressive risk-on strategies, suggesting that maintaining tight leverage is prudent as Bitcoin navigates through its current fragile phase.