Earlier this week, eight of the eight key on-chain and technical indicators tracked by crypto analytics firm Glassnode’s “recover from bitcoin bears” indicated that the next bitcoin bull market could be here. This was the first time since March 2016 that all eight indicators were flashing a BTC buy signal simultaneously.
Glassnode analysts use the “Bitcoin bear recovery” dashboard to explore whether bitcoin may be in the process of transitioning from a bear market to a long-term bull market. Dashboard analyzes whether Bitcoin is trading above the dominant pricing model, whether or not network utilization speeds are increasing, whether market profitability is returning, and whether the USD-denominated balance is Bitcoin Money favors long term HODLers.
On Thursday, one of the indicators (2-year Z-score of fee multiple to revenue) was slightly reserved and no longer showing a buy signal. However, this reversal will be short-lived and all eight indicators will soon start flashing green once again.
This can have important implications for Bitcoin worth. As the graphic above shows, during bitcoin bull markets, it is common to see Glassnode’s “Recovering from Bitcoin Bear” dashboard flashing green between all eight and less than eight indicators. it doesn’t mean anything in itself Bitcoin worth.
What’s more meaningful here is when you consider the moment all eight indicators on the dashboard start flashing green for the first time after a long time. Bitcoin bear market. The last time this happened during October 2020, when Bitcoin Was trading near $11,500. By April 2021, bitcoin had risen to $63,000. Prior to October 2020, all eight indicators had not been flashing green since July 2019, except for a brief period in April 2020.
Other examples include when all eight indicators flashed green for the first time since May 2019 and October 2015 following a prolonged bitcoin bear market. All these previous above examples represent excellent moments to buy bitcoin. If all eight of Glassnode’s bitcoin starts to recover from bear indicators, the green may soon start to flash, so analysts could interpret this as a sign that bitcoin’s risk-reward is favorable at current price levels. Really great.
Breaking Down the Recovery from the Bitcoin Bear Dashboard
Below is a breakdown of each of the eight indicators used by Glassnode in their “Recovering from the Bitcoin Bears” dashboard.
Signals 1 and 2 – Bitcoin above its 200DMA and true value
Bitcoin’s 2023 rally has seen it break north of its 200-day simple moving average (SMA) and true value, the average price at the time each bitcoin last moved. Both are viewed as technical levels of major long-term importance. A break above them is seen by many as an indicator that near-term price momentum is turning in a positive direction.
Signals 3 & 4 – New address and fee revenue momentum is positive
The 30-day SMA of new bitcoin address creation moved above its 365-day SMA from a few months ago, a sign that the rate at which new bitcoin wallets are being created is accelerating. This has historically happened at the beginning of a bull market.
The revenue to fee multiple was the indicator that turned positive on Wednesday, only to then turn negative again on Thursday. The Z-score is the number of standard deviations above or below the mean of the data sample. In this example, Glassnode’s Z-score is the number of standard deviations above or below the average bitcoin fee revenue over the past 2-years.
Signs 5 and 6: Market profitability is returning
The 30-day simple moving average (SMA) of the Bitcoin Realized Profit-Loss Ratio (RPLR) indicator moved above one for the first time a few weeks ago last April. This means that the bitcoin market is feeling a greater proportion of gains (denominated in USD) than losses.
According to Glassnode, “this generally indicates that sellers with unrealized losses have been eliminated, and a healthy flow of demand exists to absorb profit-taking”. Therefore, this indicator is sending a bullish signal.
Meanwhile, the Adjusted Spent Output Profit Ratio (aSOPR), an indicator that reflects the degree of actual profit and loss for all coins operating on the chain, recently surpassed 1, indicating that the market is in profit. . Looking at bitcoin’s history over the past eight years, aSOPR rising above 1 after a long time has been a great buy signal.
Signal 7 & 8: BTC balance has shifted in favor of HODLers
According to Glassnode, the Bitcoin Realized HODL multiple has been on the rise over the past 90 days, which is a bullish sign. The crypto analytics firm says that “when the RHODL Multiple Transition turns into an uptrend in the 90-day window, it indicates that USD-denominated funds are starting to move back towards new demand flows”. This “indicates that profits are being taken, that the market has been able to absorb them… (and) that long-term holders are starting to spend the coin,” says Glassnode.
Glassnode’s final indicator of recovery from the bitcoin bears dashboard is whether the 90-day exponential moving average (EMA) of bitcoin supply has been in an uptrend over the past 30 days. Supply in profit is the number of bitcoins that moved last when USD-denominated prices were lower than they are now, meaning they were bought at a lower price and the wallet holds on to paper profit. This indicator is also flashing green.
Glassnode’s widely followed dashboard comes at a time when a laundry list of other popular on-chain and technical indicators are also showing bullish signs.
Read more: Bitcoin Bears Beware – Yet Another Key Metric Is Flashing BTC Buy Signal
Given all of the above, it should perhaps come as no surprise that bitcoin continues to defy macro headwinds, such as the recent rise in the US dollar and US bond yields driven by the recent hawkish build-up of Fed tightening expectations. . Communication from policy makers after this month’s super strong Tier One US data release.
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