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Bitcoin bulls are licking their lips as they look at various indicators of widely tracked on-chain activity. The world’s first cryptocurrency and the largest by market capitalization has already surpassed 40% this year, but macro headwinds are likely to persist as the US Federal Reserve continues to tighten monetary policy. Hypothetically, the uptrend could continue in the coming months if the positive trend on the chain continues. Don’t let it get too bad.
Bullish trending on-chain indicators – look under the hood
According to data presented by crypto analytics firm Glassnode, the 14-day exponential moving average (EMA) of the number of active addresses interacting with the Bitcoin network was around 975,000 on Wednesday, showing a consistent upward trend since the end of last year to 900,000. was well below If this metric can continue to climb and exceed 982,000, it will be the highest number of active addresses since May of last year. The number of active addresses on the network can be viewed as a rough proxy for BTC demand.
Elsewhere, the 14-day EMA for the number of transactions taking place on the network approached its highest level since early 2021 when it hit nearly 305,000 on Wednesday. This is an increase of about 50,000 from the end of 2022. An increase in the number of transactions can also be used as a rough proxy for an increase in BTC demand.
Similarly, the 14-day EMA for recently created new Bitcoin addresses has climbed to near its highest level since mid-2021, hitting 459,000. It has increased by about 40,000 since the end of December. The accelerating number of new addresses interacting with the Bitcoin network suggests that Bitcoin “adoption” is accelerating.
The increase in the rate at which new addresses are created is also seen in the recent increase in the number of Bitcoin addresses holding non-zero balances. That was Thursday’s 44.193 million, close to an all-time high. Last month he surpassed 44.2 million. Addresses holding non-zero balances have historically risen in both bull and bear markets, meaning that short-term correlation with price is almost non-existent, but most people have non-zero balances. We interpret the rise in the number of addresses in our balances as a positive long-term sign. – The term as it implies the continued “adoption” of Bitcoin.
The laundry list of bullish technical and on-chain signals is growing
The technical metric positive trend above comes at a time when many alternative on-chain and technical metrics are screaming that the 2022 bear market is probably over. As we discussed in a recent post, most of the on-chain and technical indicators that Glassnode tracks in its “Recovery from Bitcoin Bear” dashboard are all flashing green.
The dashboard will show whether Bitcoin is trading above major pricing models, whether network usage is gaining momentum, whether the market is recovering profitability, and the balance of USD-denominated Bitcoin assets. We track eight metrics to see if it favors long-term HODLers.
In terms of where Bitcoin is trading and the primary price model, Bitcoin has surged its 200-day moving average and realized price this year, both just below $20,000, a double bullish move on the tech side. Another recent technical buy signal that has excited the bulls is Bitcoin’s seventh ‘gold cross’ in the last decade.
As explained in this recent article, Bitcoin’s reserve risk and MVRV-Z score, which “compares market and realized value to assess whether an asset is overvalued or undervalued.” Other on-chain metrics tracked by Glassnode are also bullish, such as signal. The latter has recently evoked a sustained recovery after a prolonged period below zero. This has historically occurred at the beginning of bull markets.
Elsewhere, another market profitability indicator tracked by another crypto analytics firm, CryptoQuant, has issued a decisive buy signal for the first time since 2019.
Market Cycle Analysis Also Suggests Bull Market Coming
Bulls are taking solace from an analysis of the market cycles historically followed by the world’s largest cryptocurrency by market capitalization. We’ve confirmed that it almost exactly follows the path of a market cycle of about four years.
Elsewhere, the widely-advocated Bitcoin pricing model tells a similar story. It shows the estimated price level based on the number of BTC available in the market for the amount available. It is currently around $55,000 and could exceed $500,000 in the next post-halving market cycle. This is about 20 times more profit than the current level.
Finally, Blockchaincenter.net’s popular Bitcoin rainbow chart shows that Bitcoin is at BUY! at the current levels. We have recently recovered from the “basically fire sale” zone of late 2022. So, the model suggests that Bitcoin is slowly recovering from a very oversold state. During the last bull market, Bitcoin was able to reach a ‘sell’. Seriously, sell! zone. If we can repeat this feat in the next post-halving market cycle within a year to a year and a half after the next halving, this model will see the price of Bitcoin rise from his $200,000 to his $300,000. suggests a possible range. This is about 8 to 13 times gain from the current level.