Already, the value of the first cryptocurrency ever created and the digital asset with the highest market capitalization increased by more than forty percent in 2018. This rally could continue in the coming months if favorable on-chain trends continue, provided that macro headwinds do not become too strong as a result of the continued tightening of monetary policy by the US Federal Reserve.
On-chain Metrics Trending in a Bullish Direction-A Look Under the Hood
According to Glassnode, the 14-day exponential moving average (EMA) of active Bitcoin addresses engaging with the network was 975,000 on Wednesday.
Since the close of the previous year, it has been steadily climbing and is currently well below 900,000. If this figure rises above 982 000, active addresses will reach their highest level since May. The amount of network addresses can approximate BTC demand.
Aside from that, the 14-day exponential moving average (EMA) of the number of transactions on the network came close to its highest level since early 2021, when it almost reached 305,000 on Wednesday. This is an increase of about 50,000 since the end of 2022.
A rise in the total number of Bitcoin transactions can also be taken as an approximate proxy for an increase in demand for Bitcoin. Also, the 14-day exponential moving average (EMA) of the number of new Bitcoin addresses being made has recently reached 459,000, which is close to its highest level since mid-2020.
Since the end of December, that number has gone up by about 40,000. When the number of new addresses that interact with the Bitcoin network goes up, it suggests that Bitcoin is becoming more popular, which is another way to measure demand.
The recent rise in the number of Bitcoin addresses with a balance is another sign that the rate of new addresses is going up.
It was last at 44.193M on Thursday, which is close to its all-time high of over 44.2 million from last month.
Even though addresses with a balance greater than zero have gone up in both bull and bear markets, there isn’t much of a link between price and balance in the short term.
Most people still see an increase in the number of non-zero balance addresses as a good sign for Bitcoin in the long run because it means more people are “adopting” Bitcoin.
The Laundry List of Bullish Technical and On-chain Signals is Growing
Positive trends in the above-mentioned technical metrics come at the same time that a variety of other on-chain and technical metrics all point to the fact that the bear market of 2022 is likely over.
The majority of the on-chain and technical indicators that Glassnode monitors in their “Recovering from a Bitcoin Bear” dashboard are all blinking green, as stated in a recent article.
The dashboard keeps an eye on eight indicators to see if Bitcoin is trading above key pricing models, if network usage momentum is growing, if the market is becoming profitable again, and if the balance of USD-based Bitcoin wealth favors long-term HODLers.
Concerning where Bitcoin is trading in relation to key price models, BTC has soared this year above its 200-Day Moving Average and Realized Price, which is both just under $20,000. From a technical point of view, this is a double sign of strength.
The fact that Bitcoin just had its seventh “gold cross” in the last ten years was another technical buy signal that got the bulls excited.
The MVRV-Z score “compares market value and realized value to see if a commodity is overvalued or undervalued,” and Bitcoin’s Reserve Risk, both on-chain indicators that Glassnode monitors, are also blaring bull signals.
After a long time below zero, the latter has recently made a steady recovery back above zero, which has happened in the past at the start of bull markets.
Another market profitability sign tracked by CryptoQuant, another crypto analytics firm, is sending a clear “buy” signal for the first time since 2019; this is the first time, this has occurred since the beginning of 2018.
Market Cycle Analysis Also Signals Incoming Bull Market
Bulls also find comfort in looking at how the world’s largest crypto by market capitalization has gone through market cycles in the past.
Early in January, the crypto-focused Twitter account @CryptoHornHairs noticed that Bitcoin is almost exactly following the path of a market cycle that lasts about four years and has been followed perfectly for over eight years.
A popular Bitcoin selling model is similar. The Bitcoin Stock-to-Flow pricing model estimates the Bitcoin market cycle at four years, based on the number of BTC in circulation compared to the amount mined each year.
The fair value of Bitcoin is $55,000, and it may surpass $500,000 in the next post-halving market cycle, a 20x increase from current values.
Finally, Blockchaincenter.net’s famous Bitcoin Rainbow Chart shows that Bitcoin is in the “Buy!” zone after recovering from the “Basically a Fire Sale” zone in late 2022.
The model shows that Bitcoin is improving after being sold off too much. Bitcoin’s last bull run hit the “Sell. Sell! “zone.
If it can do so again within 1 to 1 and a half years after the next halving, the model predicts that Bitcoin’s price will be between $200,000 and $300,000, from the current state of affairs, which represents 8–13 times the gains.
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