Seven out of eight key indicators on-chain indicate that the Bitcoin bull market is here
Seven of the eight key technical and on-chain indicators that Glassnode’s “Recovering From a Bitcoin Bear” dashboard tracks are signaling that there might be a new Bitcoin bull market. The dashboard is used by Glassnode analysts to determine if Bitcoin is in the process or not of moving from a bearish market to a bull market.
The dashboard analyzes whether Bitcoin is trading at a higher price than key pricing models, whether network utilization momentum has increased, market profitability is returning, and whether Bitcoin wealth in USD-denominated Bitcoin is favoring long-term HODLers.
Signals 1 & 2 – Bitcoin above its 200DMA and Realized price
Bitcoin’s rally recently saw it breach its 200-Day Simple Movement Average (SMA), and Realized price, which are the average prices at the time each Bitcoin moved last. These are technical levels that have important long-term implications. 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 a few week ago. This is a sign that new Bitcoin wallets are becoming more popular. This is a common occurrence at the beginning of bull markets.
The Revenue from Fees Multiple still has a negative Z-score of -0.33 over the 2-year period. The Z-score measures the standard deviations from the mean in a data sample. 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.
This dashboard indicator is the only one that doesn’t flash a buy signal yet. This can change quickly, however, as the history of Glassnode shows.
Signals 5 & 6: Market Profitability Is Returning
Recently, the 30-Day Simple Moving Average of the Bitcoin Realized Loss-Product Ratio indicator (RPLR), moved above one for only the second 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 surpassed 1 recently, indicating that the market is in profit. The aSOPR’s rise above 1 after a long period below it is 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 the RHODL Multi transitions into an upward trend 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.
What’s Next for Bitcoin if the Bull Market is Real?
In 2023, Bitcoin shorts were wiped out. There is growing evidence that this year will be much more favorable for crypto than 2022, with expectations of an easing in monetary tightening by the US Federal Reserve. Bitcoin crossed $24,000 for the first time since August. This was despite continuing tailwinds from Wednesday’s Fed policy meeting that wasn’t as hawkish. The year’s gains are currently above 40%.
Some people believe that Bitcoin may be affected by the increased likelihood of a US recession in the future. However, historically, Bitcoin has been the largest cryptocurrency in terms of market capitalization. A US recession would encourage a quicker easing of financial conditions as markets place their bets on Fed rate cuts.
There is growing evidence that the latest rally is not just a bear trap, but the beginning of a long-lasting recovery. An analysis of Bitcoin’s historical market cycles suggests that a similar story is possible.
If Bitcoin continues to gain ground over the next few weeks, then the $25,500 area is the next critical area to watch. If the price breaks above this level, it would allow Bitcoin to accelerate towards the 23.6% Fibonacci Retracement level, which is the distance from Bitcoin’s 2022 low of $15,500 to its 2021 record high of $69,000. Then, the $30,000 level.