Bitcoin launches bull market These 8 Key Indicators Just Turned Green For the First Time since Early 2021
This week, eight of the eight key technical and on-chain indicators that Glassnode tracks in its “Recovering From a Bitcoin Bear” report indicated that the next Bitcoin bullish market may be upon us. Since March 2016, it was the first time all eight indicators flashed a BTC buy signal together.
Glassnode analysts use the “Recovering From a Bitcoin Bear” dashboard to assess whether Bitcoin is in the process or not of moving from a bearish market into a bull market. This dashboard analyzes whether Bitcoin is trading above key pricing model, whether network utilization momentum has increased, whether market profitability returns, and whether long-term HODLers are benefiting from Bitcoin’s USD-denominated Bitcoin wealth.
On Thursday, the indicator (the 2-year Z score of the Revenue from Fees Multiple) was slightly reserved and no longer flashed a buy signal. This reversal is likely to be temporary and all eight indicators will soon flash green in unison.
This could have significant implications for Bitcoin’s price. The graphic shows that during a Bitcoin bullish market, it is not uncommon to see Glassnode’s “Recovering From a Bitcoin Bear” dashboard switch between eight or fewer indicators flashing green. However, this doesn’t necessarily mean that the Bitcoin price will go up.
This is even more significant when you consider when the eight indicators on the dashboard turn green for the first-time after a long Bitcoin bear market. This happened last October 2020 when Bitcoin was trading at $11,500. Bitcoin had risen to $63,000 by April 2021. All eight indicators had not been showing any greens since July 2019, except for a brief time in April 2020.
In May 2019, and October 2015, are two other examples of times when all eight indicators began flashing green after a prolonged Bitcoin bear. These are all excellent times to buy Bitcoin. Analysts might interpret the eight Glassnode Recovering From a Bitcoin Bear indicators as an indication that Bitcoin’s current price level is very risk-reward.
The Recovering from a Bitcoin Bear Dashboard
Below is a list of eight indicators that Glassnode uses in their “Recovering From a Bitcoin Bear” dashboard.
Signals 1 & 2 – Bitcoin above its 200DMA and Realized price
Bitcoin’s rally of 2023 has seen it move north of its 200 Day Simple Moving Average (SMA), and Realized price, which is the average price at which each Bitcoin moved last. Both of these technical levels are important for the long-term. Many view a break above these levels as an indication that near-term price momentum shifts in a positive direction.
Signals 3 and 4 – Fee Revenue Momentum and New Address are Positive
The 30-Day SMA for new Bitcoin address creation was higher than its 365-Day SMA just a few months back, which is a sign that new Bitcoin wallets are becoming more popular. This is a common occurrence at the beginning of bull markets.
The indicator Revenue from Fees Multiple turned positive on Wednesday and then fell again on Thursday. The Z-score measures the standard deviations from the mean in a sample of data. Glassnode’s Z score is, in this case, the number of standard deviations that are above or below the average Bitcoin Fee Revenue over the past 2-years.
Signals 5 & 6: Market Profitability Is Returning
The SMA (simple moving average) of the Bitcoin Realized Loss Ratio indicator (RPLR), moved above one a few days ago. This was the first time since April. This means that Bitcoin market is generating more profits (denominated USD) than losses.
Glassnode says that this indicator generally indicates that sellers have exhausted their losses and there is a stronger demand to absorb profits. This indicator is a bullish sign.
The Adjusted Spent Profit Ratio (aSOPR), which measures the amount of realized profit or loss for all coins on-chain, has also recently exceeded 1, meaning that the market is in profit. The aSOPR’s rise above 1 after a long period below it was a great buy signal.
Signals 7 & 8: The BTC Balance has Moved in Favor Of The HODLers
According to Glassnode, the Bitcoin Realized HODL Multi has been in an upward trend for the past 90 days. This is a bullish sign. According to the crypto analytics firm, “when RHODL Multiple moves into an uptrend within a 90-day period, it means that USD-denominated wealth has begun to shift towards new demand inflows.” It indicates that profits are being taken and the market can absorb them… (and), that longer-term owners are beginning to spend coins.” Glassnode states.
Glassnode’s last indicator in the Recovering From a Bitcoin Bear dashboard shows whether the 90-day Exponential moving average (EMA) for Bitcoin Supply in Profit has been trending upwards over the past 30 days. Supply in Profit refers to the number of bitcoins that moved last when USD-denominated currencies were lower than they currently are. This indicates that they were purchased at a lower price and that the wallet is still making a profit. This indicator is also green.
The widely-followed dashboard by Glassnode comes at a moment when many other popular technical and on-chain indicators are also showing bullish signals.
Continue reading: Bitcoin Bears beware – Another key metric is flashing a BTC buy signal
All of this being said, it is perhaps not surprising that Bitcoin continues to defy macro-headwinds. This includes the recent rise in the US dollar, and US bond yields, driven by Fed tightening expectations following recent hawkish communications by policymakers in response to the string of strong tier 1 US data releases.