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Bitcoin The bulls are licking their lips as they watch various widely followed metrics of on-chain activity. The world’s first cryptocurrency and the largest by market capitalization is already up more than 40% this year, but that rally could extend in the months ahead if positive on-chain trends continue, assuming macro headwinds from the US Federal Reserve continued to tighten monetary policy. It is not very serious.
On-chain metrics trending bullish – a 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 Bitcoin The network stood at about 975,000 on Wednesday, hitting a consistent high since ending last year under 900,000. If this metric can continue to rise and move above 982,000, active addresses will be at their highest level since last May. Number of active addresses on the network that can be viewed as rough proxies B T c demand.
Elsewhere, the 14-day EMA of the number of transactions taking place on the network recently edged closer to its highest level since the start of 2021, when it hit nearly 305,000 on Wednesday. This is an increase of about 50,000 from the end of 2022. Increasing transaction count can also be used as a rough proxy for growth. B T c demand.
Similarly, the 14-day EMA of new bitcoin addresses being created recently neared its highest level since mid-2021, reaching 459,000. It’s about 40,000 since late December. An acceleration in the number of new addresses interacting with the bitcoin network suggests an acceleration in “adoption” of bitcoin, which is another proxy for demand.
The recent increase in the rate at which new addresses are being created can be seen in the number of bitcoin addresses with non-zero balances, which stood at 44.193 million on Thursday, an all-time high. Was close set, up from 44.2 million the previous month. While addresses holding a non-zero balance have historically grown in both bull and bear markets, meaning that its short-term correlation to price is pretty much non-existent, most non-zero balance addresses still hold the number of long-term targets. Interpret it as a positive sign in time. -term, given continued bitcoin “adoption”.
A growing laundry list of bullish technicals and on-chain signals
The positive trend in the above mentioned technical metrics comes as a complement to a host of alternative on-chain and technical metrics that scream that the bear market of 2022 is probably over now. As discussed in a recent articleMost of the on-chain and technical indicators tracked by Glassnode are all glowing green in their “Bitcoin recovered from bears” dashboard.
The dashboard tracks eight indicators to ascertain whether bitcoin is trading above key pricing models, whether network utilization is gaining momentum, whether market profitability is returning, and whether USD-denominated The balance of bitcoin wealth is in favor of long-term HODLers.
Where Bitcoin is Trading Against Major Pricing Models This year saw BTC rise above its 200-day moving average and realized price, both of which sit below $20,000, indicating a double bullish turn on the technical front. Another recent technical buy signal that has bulls excited is that bitcoin is only experiencing its Seventh “Gold Cross” in the last 10 years.
Other on-chain indicators tracked by Glassnode such as bitcoin reserve risk, as discussed in recent article, and the MVRV-Z score, which “compares market value and realized value when assessing whether an asset is over- or undervalued,” are also shouting bullish signs. The latter has recently made a sustained recovery above zero after a long period that has historically marked the beginning of a bull market.
Elsewhere, another market profitability indicator tracked by Cryptoanalytics firm, CryptoQuant, is giving a definite buy signal for the first time since 2019.
Market cycle analysis also signals a bull market to come
Bulls are also taking solace from the analysis of market cycles that the world’s largest cryptocurrency by market capitalization has historically followed. In early January, the crypto-focused Twitter account @CryptoHornHairs identified that bitcoin was trending almost exactly along the path of a four-year market cycle, which has been fully respected for eight years now.
Elsewhere, a widely followed bitcoin pricing model is sending out a similar story. The bitcoin market cycle is roughly four years, according to the bitcoin stock-to-flow pricing model, which shows the estimated price level of bitcoin based on the number of BTC available in the market relative to the amount being mined each year. The fair value right now is around $55K and could rise above $500K in the market cycle after the next halving. This is almost a 20x return from current levels.
Finally, the popular Bitcoin Rainbow chart from Blockchaincenter.net shows that, at current levels, Bitcoin is a “Buy!” The area, most recently recovered from the late 2022 “basically a fire sale” area. In other words, the model suggests that bitcoin is slowly recovering from being extremely oversold. During its last bull run, bitcoin was able to reach a “sell”. Seriously, sell! Area. If it can repeat this feat in the next halving market cycle within a year and a half after the next halving, the model suggests a potential bitcoin price in the $200-$300K region. This is about 8-13 times more than the current level.