Is The Bitcoin Bear Closing Up?

Is The Bitcoin Bear Closing Up?

Key Insights

  • Bitcoin's bear market may have come to an end, considering the signs of anincoming
  • Bitcoin's performance over the last quarter has been impressive and may be the first indicator of an incoming bull run.
  • The correlation between Bitcoin and gold is significantly positive on a 30-day, 90-day, and 365-day basis.
  • There have been massive Bitcoin buys from long and short-term holders since the FTX crash

In a tweet earlier this week, Glassnode, a well-known provider of on-chain analytics, speculated that the Bitcoin market decline may have come to an end, owing to the signs of a strong rebound.

According to on-chain analytics, Bitcoin has been performing incredibly well, outperforming itself in terms of market volume since hitting an all-time high in 2021.

Since October 2021, the cryptocurrency has risen by a notable 70% over the past quarter.

However, there are strong indicators that this may only be the start of further bullishness, according to Glassnode.

In this article, we pick up Bitcoin's price outlook, as well as several reasons Glassnode thinks the bear market may be behind us.

Reason 1: Bitcoin's Performance In 2023 Has Been Impressive

Glassnode reports that Bitcoin had its best price performance since the market's all-time high, and several on-chain indicators are indicating that this trend is likely to continue.

The price of bitcoin is now testing supports around the $30k zone, reaching the highest quarterly gains (+70%) since the record high in October 2021.

Also, according to Glassnode, this was the second time that weekly returns exceeded 36%, firmly establishing Bitcoin as the highest-performing asset class YTD.

In sharp contrast to 2022, the analytics platform says, the market's excellent performance in 2023 indicates that a transition into a bull market is in progress.

<em>Chart showing Bitcoin's quarterly and monthly price performance</em>
Chart showing Bitcoin's quarterly and monthly price performance

Reason 2: Bitcoin Now Shows A Correlation to Gold

Citing the increasing link between the performance of BTC prices and Gold (the traditional haven for money) during the past 12 months, Glassnode describes it as an intriguing phenomenon.

The correlation between these two assets is presently significantly positive on a 30-day, 90-day, and 365-day basis and has remained high during the recent US financial crisis a few weeks ago.

<em>Chart showing Bitcoin's correlation to Gold | <span style="font-size: 16px;">Source: </span><a href="" rel="noopener" style="font-size: 16px;" target="_blank"><u>Glassnode</u></a></em>
Chart showing Bitcoin's correlation to Gold | Source: Glassnode

This does imply that investors are becoming more conscious of the importance of sound money, as well as the reality of counter-party risk.

Reason 3: Bitcoin's Long/Short-Term Holder Threshold

Glassnode mentioned in their insight piece, that the long and short-term bitcoin holder threshold starts at approximately the date FTX crashed.

Glassnode noted that before FTX collapsed, the Long-Term Holders (LTH) bought most of their coins. And now, they have a total supply balance of 14.161M BTC, which is just shy of a new ATH.

On the other hand, after FTX crashed, Short-Term Holders bought coins, and in 2023, their supply balance of 2.914M BTC remained mostly steady.

<em>Chart showing Bitcoin's long/short-term holder threshold</em>
Chart showing Bitcoin's long/short-term holder threshold

This means that the long-term holders who made it through the 2021–22 bear market and are still holding, account for 22.2% of the supply.

Plus, the holders who bought between $25,000 and $30,000 make about 7.25 per cent of the total supply and are considered short-term holdings.

<em>Chart showing Bitcoin's unspent Realized Price distribution</em>
Chart showing Bitcoin's unspent Realized Price distribution

Glassnode notes that with more than 23.3% of the supply kept outside of exchanges and owned by LTHs who are underwater on their position, the market is now firmly within the "Plateau of Patience".

Also, there are significant parallels between the present supply system and early 2016/2019.

Reason 4: BTC's 7-Day EMA And NUPL Show Incoming Bull Run

Glassnode says that the temptation to spend and sell among investors will start to increase since there are so many coins that are returning to an unrealized profit.

<em>Chart showing Bitcoin's NUPL</em>
Chart showing Bitcoin's NUPL

With a value of 0.36 on Bitcoin's NUPL, the market is relatively evenly balanced, with 55.8% of days showing a higher reading and 44.2% showing a lower reading. This is similar to previous cycles where a changeover between bear and bull markets occurred. Also, it implies that the market is neither significantly undervalued (as it was at $16k) nor much overpriced (as it was at the high around $60k+).

<em>Chart showing Bitcoin's Percentage supply in profit</em>
Chart showing Bitcoin's Percentage supply in profit

As per the percentage supply in profit, Glassnode notes that the exponential increase in coins kept at a profit supports the YTD market surge. Widespread capitulation, which by definition requires an equal and opposite inflow of demand to absorb it, is what defines bear market floors.

All of these coins earn a profit when the price surges out of the bottom formation zone. The entire amount of 6.2 million bitcoins that were profitable in 2023 (32.3% of the supply) shows how substantial the cost base foundation is below $30,000.

The Verdict

Using the set of indications mentioned above, Glassnode has looked at the on-chain environment for Bitcoin from a variety of perspectives.

The analytics platform speculates that it can create methods that discover confluence because, on the whole, BTC investors' actions have been extremely consistent throughout cycles.

<em>Chart showing Glassnode's confluence summary | <span style="font-size: 16px;">Source: </span><a href="" style="font-size: 16px;"><u>Glassnode</u></a></em>
Chart showing Glassnode's confluence summary | Source: Glassnode

One of Glassnode's four on-chain indicators, seen in the figure above, looks for convergence in eight indicators across four regions to indicate a strong and healthy market rebound. As can be observed, the present market has 8 out of the 8 signs in green, indicating that the Bitcoin bear may very well be over.

Bitcoin's Price Outlook

Bitcoin, after a significant price rejection from the $30,000 zone, BTC is bearish over the last 24-hour and 7-day periods.

In the charts, the cryptocurrency is testing its 20-day moving average (red line) and appears to be on the verge of a breakdown.

<em>Chart showing Bitcoin's price action</em>
Chart showing Bitcoin's price action

In the event of a breakdown from this moving average, the 50-day moving average is expected to hold up the price to around $26,600.

On the other hand, the RSI on the daily chart is headed for the neutral zone and may present opportunities for the bulls to mount an attack against the bears, and catapult the price of BTC into another retest of the $30,000 zone.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.

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