According to analysts from Glassnode, the Bitcoin (BTC) market has recently climbed above $30,000, posting the strongest quarterly returns (+70%) since the all-time high in October 2021.
This was also the second time weekly returns have reached +36%, placing Bitcoin as the best performing asset class year-to-date.
According to analysts, the strong market performance in 2023 stands in stark contrast to 2022 and shows that a positive regime change continues. In this report, Glassnode examines several on-chain indicators that support this idea and help assess whether there is a solid recovery from the bear market and whether the bear market is over.
Is the #Bitcoin bear market over?
With a rally 100% off the lows, $BTC is trading above a very large cluster of supply, that formed the 2022 floor.
— glassnode (@glassnode) April 17, 2023
Glassnode: "Bitcoin and Gold Correlation Increased"
An interesting development in the last 12 months has been the increased correlation of BTC prices compared to gold, the traditional safe haven for money. On a 30-day, 90-day and 365-day basis, the correlation between these two assets is now strongly positive and remained high throughout the last US banking crisis a few weeks ago.
The Bitcoin market is in an interesting position where the 155-day Long/Short-Term Holder (LTH/STH) threshold is approximately at the time of the FTX crash. Therefore, Glassnode interprets the LTH and STH metrics as follows:
- Long Term coin holders bought the coin before FTX crashed and they now have a total supply balance of 14,161 million BTC, which is an all-time high.
- Short Term coin holders bought the coin after FTX crashed, and their supply balances of 2.914 million BTC in 2023 remained fairly flat.
When Glassnode turns this observation into a scatterplot of investor purchase prices, it arrives at three key supply clusters:
- Dip Formasyon Kümesi < 25.000 Dolar: Bu coin’ler Haziran 2022 ile Ocak 2023 arasında büyük ölçüde el değiştiren coinler. Bu aralıkta LTH (FTX öncesi) ve STH (FTX sonrası) alıcıları arasında oldukça eşit bir denge var.
- New Purchase $25,000 to $30,000: These coins make up 7.25% of the supply and carry much more weight in favor of STH coins. This reflects a combination of bottom profits and coins sold to rally buyers as the price climbs above $25,000.
- Cycle Survivors ($30,000+): Long-term coin holders who survived the volatility and chaos of the 2021-2022 cycle and still hold their assets account for 22.2% of the supply.
Glassnode also tracks the current market cycle through the lens of behavior of long-term holders. According to Glassnode, the behavior of long-term asset holders falls in three basic phases:
- Patience Plateau: The plateau where the supply held by LTH tends to hover around its all-time high, usually from a few months to a year.
- Peak HODL, where the LTH supply in profits is increasing rapidly and often prices are surging towards their all-time high.
- “The Breakdown of ATH Breakout” where LTHs are starting to heavily distribute coins to new waves of demand entering the market.
According to Glassnode, the market is currently in the Patience Plateau stage. Analysts point to this as 23.3% of the off-exchange supply being held by long-term coin holders (LTH) who have lost their positions.
According to Glassnode, the current supply structure also shows great similarities with 2016 and early 2019.
"The Number of Coins in Profit Increased"
Glassnode observed that the current strength of the market in 2023 is supported by a significant increase in the number of coins held in profit. This shows that investors are optimistic about the future of the market and hold their assets. In contrast, on bear market floors, investors tend to sell their holdings heavily.
In simpler terms, this means that according to Glassnode analysts, we have observed a significant increase in the number of people holding Bitcoin at a higher price than the original purchase price, indicating that the market is currently strong and supported.
According to analysts, this is a positive sign for Bitcoin investors, as during bear markets users tend to sell their Bitcoins at a loss, leading to a drop in demand and prices. Therefore, the large number of people keeping Bitcoin in profit means there is strong demand for Bitcoin and a positive outlook for its price.
However, Glassnode also addressed the question of whether the bears were eaten. Analysts used the popular NUPL metric for this.
NUPL (Net Unrealized Profit/Loss) is a popular metric used to measure the percentage of Bitcoin's market value held as unrealized profit. This metric gives an idea of whether traders are in profit or loss.
According to Glassnode analysts, the market is at a fairly neutral level with its current value of 0.36.
This coincides with past cycles where there was a crossover between bear and bull markets, according to analysts. It also shows that the market is neither overly cheap (as at $16,000) nor overvalued (as at $60k+ peak).
*Not investment advice.