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On-chain Indicators Scream Bitcoin Bull Market as the BTC Price Roars Back

Bitcoin’s latest comeback, which saw the world’s largest cryptocurrency by market capitalization achieve a fresh nine-month high in the mid-$26,000s on Tuesday, has been accompanied by a number of key technical and on-chain indicators roaring back to health and once again sending a positive BTC signal. Bitcoin is up almost 27% from last week’s lows in the mid-$19,000s, even if it fell below $25,000 again on Wednesday. A string of high-profile crypto/start-up/tech-friendly bank failures was weighing on the stock.

Nonetheless, bulls vigorously defended key long-term levels like the 200DMA and Realized Price ($19,700-800). Over the weekend, US regulators announced a $25 billion bank liquidity package to improve balance sheets and protect depositors, which boosted BTC.

Financial stability issues reduce the likelihood of additional Fed tightening and increase the appeal of Bitcoin, a decentralized financial system. Bitcoin’s defense of its 200DMA and Realized Price has further buoyed the rally. The recent surge has improved some key on-chain metrics after last week’s downturn.

More specifically, if Bitcoin can hold onto recent gains and/or extend upside towards the next key resistance around just above $28,000 (as many technicians now expect), crypto analytics firm Glassnode’s widely followed “Recovering from a Bitcoin Bear” dashboard of on-chain and technical indicators is likely to start flashing a bull market signal again.

Glassnode’s “Recovering from a Bitcoin Bear” dashboard examines eight metrics to determine whether Bitcoin is trading above key pricing models, network usage momentum is improving, market profitability is recovering, and USD-denominated Bitcoin wealth favors long-term HODLers. All eight flashing green has historically been bullish for Bitcoin. Seven of eight indicators are glowing green. Bitcoin is far above its 200DMA and Realized Price. Many believe a break above these levels indicates favorable near-term price momentum.

A few months ago, the 30-Day SMA of new Bitcoin address creation rose beyond its 365-Day SMA, indicating a faster pace of wallet formation. Bull markets start with this. Revenue From Fees Multiple went positive on Wednesday and negative on Thursday. Data sample Z-scores are the number of standard deviations above or below the mean. Glassnode’s Z-score is the number of standard deviations above or below the 2-year mean Bitcoin Fee Revenue.

The third and fourth signs of network use heading upward are likewise favorable. The 30-Day Simple Moving Average (SMA) of the Bitcoin Realized Profit-Loss Ratio (RPLR) indicator has remained above one despite the recent Bitcoin market downturn. The Bitcoin market is making more USD profits than loses. Glassnode says “this often means that sellers with unrealized losses have been exhausted, and a healthier influx of demand exists to absorb profit taking”. This indication remains bullish.

The 30-day SMA of Bitcoin’s Adjusted Spent Output Profit Ration (aSOPR) indicator, which measures realized profit and loss for all coins traded on-chain, just dropped below one (meaning it is no longer sending a bull signal). That suggests the market has lost money over the past 30 days.

But, the last price bounce, if sustained, should return this indication to the north of one. All eight Glassnode indicators are flashing green. Throughout the last eight years of Bitcoin history, the aSOPR climbing above 1 after a long time below it has been a great buy signal.

Finally, two indicators indicate if the USD wealth balance has swung back in favor of HODLers to signal weak-hand selling weariness.

Glassnode says the Bitcoin Realized HODL Multiple has been rising for 90 days. “When the RHODL Multiple converts into an uptrend over a 90-day window, it suggests that USD-denominated wealth is starting to shift back towards new demand inflows,” says the crypto analytics firm. That shows that the market can absorb gains. Glassnode claims that long-term holders are spending coins.

Glassnode’s Recovering from a Bitcoin Bear dashboard’s final signal is if the 90-day Exponential Moving Average (EMA) of Bitcoin Supply in Profit has been rising over the past 30 days. Supply in Profit is the number of Bitcoins that last moved while USD-denominated prices were lower, indicating the wallet is holding a paper profit. This indicator flashes green.

 

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