Earlier this week, eight out of eight on-chain and technical indicators tracked by crypto analytics firm Glassnode “Bitcoin Bear Retrieval” just signaled that the next Bitcoin bull market could be here. That was the first time all eight indicators had shown a buy signal for BTC in unison since March 2016.
Glassnode analysts use the “Bitcoin Bear Recovery” dashboard to assess whether Bitcoin might be in the process of transitioning from a bear market to a longer-term bull market. The board analyzes if Bitcoin is trading above key price patterns, whether or not network utilization momentum is picking up, whether market profitability is returning, and whether the balance of USD-denominated securities Bitcoin wealth is in favor of HODLers in the long run.
On Thursday, one of the indicators (the 2-year Z-score of the multiple of fee income) was slightly reserved and was no longer showing a buy signal. However, this reversal is likely to be short-lived and it is likely that all eight indicators will soon start flashing green in unison once again.
This could have important implications for the Bitcoin price. As the chart above demonstrates, during a Bitcoin bull market, it's common to see Glassnode's “Railing From a Bitcoin Bear” dashboard switching between the eight and minus eight indicators flashing green. This in itself means nothing to him. Bitcoin price.
What's most significant here is when you consider the moment when all eight indicators on the dash first start blinking green after a long time. Bitcoin bear market The last time this happened was during October 2020, when Bitcoin it was trading around $11,500. By April 2021, Bitcoin had risen to $63,000. Prior to October 2020, all eight indicators had not flashed green since July 2019, apart from a brief period in April 2020.
Other examples of when all eight indicators started flashing green for the first time in a long time after a prolonged Bitcoin bear market include May 2019 and October 2015. All of these past instances represent excellent times to have bought Bitcoin. If all eight of Glassnode's Bitcoin Bear Rally indicators start flashing green as soon as possible, analysts could interpret this as a sign that Bitcoin's risk-reward ratio at current price levels is indeed very high. good.
Breaking down the recovery of a Bitcoin Bear panel
Below is a breakdown of each of the eight indicators used by Glassnode in their “Bitcoin Bear Recovery” dashboard.
Signals 1 and 2: Bitcoin above its 200DMA and price realized
Bitcoin's 2023 rally has seen it break north of its 200-day simple moving average (SMA) and realized price, the average price at the time each Bitcoin last moved. Both are seen as technical levels with key long-term significance. A break above them is seen by many as an indicator that near-term price momentum is moving in a positive direction.
Signs 3 and 4: Revenue momentum from new addresses and fees is positive
The 30-day SMA of new Bitcoin address creation moved above its 365-day SMA a few months ago, a sign that the rate at which new Bitcoin wallets are being created is accelerating. This has historically happened at the start of bull markets.
The Multiple of Commission Income was the indicator that turned positive on Wednesday, only to turn negative again on Thursday. The Z score is the number of standard deviations above or below the mean of a sample of data. In this case, Glassnode's Z-score is the number of standard deviations above or below the mean of Bitcoin fee revenue over the last 2 years.
Signs 5 and 6: Market profitability is returning
The 30-day simple moving average (SMA) of Bitcoin's profit and loss ratio (RPLR) indicator moved above one a few weeks ago for the first time last April. That means that the Bitcoin market is making a higher ratio of gains (denominated in USD) than losses.
According to Glassnode, "This usually means that sellers with unrealized losses have dried up and a healthier demand stream is in place to absorb profit-taking." Therefore, this indicator is sending a bullish signal.
Meanwhile, the Adjusted Spent Out Profit Ratio (aSOPR), a gauge that reflects the degree of realized profit and loss for all coins moved on-chain, also recently topped 1, signaling the market is in profit. Looking back over the last eight years of Bitcoin's history, the rise of aSOPR above 1 after an extended period below has been a fantastic buy signal.
Signals 7 and 8: BTC balance has moved in favor of HODLers
Bitcoin's realized HODL multiple has been trending up over the past 90 days, a bullish sign according to Glassnode. The crypto analytics firm states that “when the RHODL Multiple transitions to an uptrend during a 90-day window, it indicates that USD-denominated wealth is starting to retrace towards new demand inflows.” “It indicates that profits are being taken, the market is able to absorb them… (and) that longer-term holders are starting to spend coins,” Glassnode states.
Glassnode's final indicator on its Bitcoin Bear Rally dashboard is whether or not the 90-day EMA of the Bitcoin supply in profit has been trending up for the past 30 days. Supply in Profit is the number of Bitcoins last moved when USD-denominated prices were lower than they are now, implying they were bought at a lower price and the wallet is holding on to a paper profit . This indicator also flashes green.
Glassnode's widely followed dashboard comes at a time when a long list of other popular on-chain and technical indicators are also showing bullish signs.
Read more: Beware Bitcoin Bears: Another Key Metric Is Showing A BTC Buy Signal
Given all of the above, it should perhaps come as no surprise that Bitcoin continues to defy macroeconomic headwinds, such as the recent move higher in the US dollar and US bond yields fueled by a build-up of Federal Reserve tightening expectations in the wake of the recent aggressive policy. communications from policymakers following this month's series of super strong US Tier 1 data releases.
