Bitcoin’s yearly start could point to an upcoming bull market: Glassnode

Glassnode released its first on-chain video report from 2023 on Tuesday, which previewed what could be data-driven indicators of a cryptocurrency bull market.

The company notes that Bitcoin and Ether price and on-chain activity have seen little volatility since the start of the year — a period like others that have historically preceded “explosive market moves.”

It starts slowly

like explained By Glassnode Principal Analyst James Chick, Bitcoin has been trading in a range around $550 since December 17. That’s just a 3.4% trading range for about an entire month.

“It’s really, really cool, and there are very few instances in history where bitcoin and any digital asset really goes dormant to that level in a volatility setting,” Chick said.

During the few times in history when volatility has been lower than its current level, Bitcoin has seen huge spikes in volatility in the aftermath – in both directions. For example, in November 2018, both Bitcoin and Ethereum fell by more than 50% after a period of flat trading. Likewise, a similarly slow period was quickly followed by the market rally that started in April 2019 from $4,000 to $14,000 within three months.

Looking at on-chain activity, Check noted that the “new title rate” turned positive for the first time since May 2021 in the wake of the FTX crash. This refers to when the average monthly generation of new blockchain addresses is higher than the annual average, indicating relatively high on-chain activity at that time.

The analyst believes that this may indicate a reversal in momentum on the chain, similar to what was seen in early 2019 – but it could still fail and decline. “It’s really a proxy for what’s happening in terms of demand and user base,” he said.

Currently, Bitcoin faces almost no fee pressure, which means there is little demand for block space to process transactions. Meanwhile, the network’s transmission volume has been in “free fall” ever since FTX The crash, I processed roughly $65 billion a day before the crash and only $5 billion currently.

Specifically, large entities trading in volumes of $10 million or more are less dominant in overall volume than they were in 2021 and most of 2022.

“There was a lot of transaction volume that was associated with the FTX-Alameda unit, and a fair part of that probably had something to do with it,” Chick said.

achieved dominance

The analyst concluded by examining Bitcoin and Ether’s Realized Cap Dominance. The metric compares the total value of Bitcoin and Ether combined based on the last time those crypto transaction units were completed and notes the share of Bitcoin and Ether in that pie.

This differs from traditional market capitalization/market dominance metrics, which unfairly value certain currencies on certain networks. Examples include several lost bitcoins believed to belong to Satoshi and untouched coins from the Ethereum ICO, which many believe are unlikely to move again.

Chick argued that the magnitude of the drawdown in each currency’s realized cap “provides us with a measure of the magnitude of the prevailing bear market.”

Currently, relatively more value generated is flowing into Ethereum than Bitcoin.

Bitcoin’s annual start in May hints at an upcoming bull market: Glassnode appeared first on CryptoPotato.

Leave a Reply

Your email address will not be published. Required fields are marked *