Leading crypto Bitcoin (BTC) has recorded a significant rally since the beginning of the year. However, investors are speculating on whether this is a bull trap or actually the start of a new bull market. Currently, there are many skeptics among analysts as to whether Bitcoin has truly bottomed. To answer this question, on-chain analytics company Gassnode has published a list of 10 indicators.
bull indicators for bitcoin
The first indicator that has already been triggered is Realized Cap HODL Waves (LTH). The indicator states that historically, during the lowest phases of bear markets, an intersection has occurred between the Realized Price * 0.7 and the 200D SMA * 0.6 price pattern.
Realized Cap HODL Waves / Source: GlassnodeThe second indication that the bear market is over is a healthy increase in miner revenues signaling a competitive fee market. According to Glassnode, the 90-day SMA of miner fee income has exceeded the 365-day SMA. This indicates a ‘constructive increase in block space congestion’.
The Long-to-Short-Term Profitability Indicator was also fully confirmed. The metric shows a large number of cryptocurrencies changing hands at low prices. This creates a ‘solid foundation’ for bull cycles as it allows the average market cost base to be realigned to cheaper and lower prices.
Bitcoin Long-Term to Short-Term Profitability / Source: GlassnodeFinally, the ‘Bitcoin Cycle Change Detection Indicator’ has also been fully triggered. The metric shows that the point has been reached where the relationship between price depreciation and supply in profit is decreasing. This means that price-insensitive holders are satisfied.
Cycle Change Detection Indicator / Source: GlassnodeThe New Address Momentum indicator, which shows a sustainable market recovery due to the increase in network activity, is in the process of approval. According to Glassnode, this happens when the 30-day SMA of new addresses exceeds the 365-day SMA and is held for at least 60 days. Glassnode said, “The first burst of positive momentum occurred in early November 2022. But this has only been sustained for a month so far,” he says.
In addition, the Supply Stress Rate Indicator has not yet been approved. During the deep bear market stages, this metric drops sharply below 1.0, indicating that the ‘weak hands’ have withdrawn from the market. According to the research firm, the rate is currently in the highest regime of market stress that has historically been enough to shake up most investors.
Indicators for bear scenario
There is talk of a broader recovery of activity by smaller and larger establishments against the imminent end of the bear market. As usual for a bear market, the Indicator of Relative Activity of Large and Small Assets still shows a significant drop in on-chain activity of assets of all sizes (threshold 1.2 here).
Relative Activity of Large and Small Entities / Source: GlassnodeAlso, the assessment of realized profit and loss indicates that the market is still bearish. As the 30-day SMA of the realized P/L ratio has not yet risen above 1.0, this indicates that demand has yet to absorb the profits taken. A similar picture was drawn by aSOPR, which monitors profitability based on spent output and signals that there is no trend change yet.
Bitcoin Realized Profit/Loss / Source: GlassnodeFinally, confidence in an on-chain trend reversal has yet to be observed, according to Glassnode. This is reflected in spending patterns as well. One way to measure this is to compare the amount of unrealized profits held in newly acquired (and HODLed) cryptocurrencies with that earned in spent coins. The indicator has not triggered yet but is close to a positive development.
Meanwhile, as you follow on Kriptokoin.com, at press time, BTC is trading at $23,218, up 8.63% on a daily basis.
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