Bitcoin [BTC] began the year with a robust 23.3% surge, allowing a wide spectrum of investors and miners to see their net holdings and activities return to profitability.
Glassnode, a leading on-chain data source, evaluated a few on-chain measures in a new research titled “Is Bitcoin Back?” to discover the significance behind last week’s remarkable price spike and underlying drivers behind the same.
Glassnode used BTC’s 200-day Simple Moving Average (200D-SMA) to determine whether the market sentiment in the previous week was bullish or bearish.
The 200-day SMA indicator is frequently used to identify macroeconomic patterns across all sorts of crypto assets. Investors and traders can evaluate if the market is in a bullish or bearish trend by comparing BTC’s price to its 200-day SMA.
With the recent price increase, Glassnode discovered that BTC had surpassed the psychological level of $19,500. It went on to say that BTC markets follow a consistent cycle pattern, with the current cycle trading below the 200D-SMA for 381 days, which is just slightly less than the 386 days of the bear market in 2018-2019.
If the price of BTC breaks above the 200D SMA, the price may rally as it did in 2019 and 2021.
Glassnode went on to say that the recent price increase caused BTC’s value to exceed its Realized Value, implying that the typical BTC holder made a net unrealized profit in the previous week. To put things into perspective, the current bear market has lasted 179 days below the Realized Price, making it the second longest bear market in the last four cycles.
When the king coin’s Adjusted Spent Output Profit Ratio (aSOPR) was examined, it was discovered that the metric would have retested a value of 1.0 from below. The aSOPR of Bitcoin is a statistic used to assess the profitability of Bitcoin transactions by comparing the income generated by a transaction to the cost of making it.
Glassnode claims that:
“An aSOPR break above, and ideally a successful retest of 1.0, has often signaled a meaningful regime shift, as profits are realized, and sufficient demand flows in to absorb them.”
When the aSOPR’s 30-day moving average exceeds 1.0, transactions become more profitable on a bigger scale, indicating a strong overall market.
