On-chain metrics indicate that the Bitcoin bear market may be behind us

By FKlivestolearn | Technicity | 19 Apr 2023

Cryptocurrencies led by Bitcoin have posted a strong performance in 2023 and several on-chain indicators support this notion

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In recent weeks, the Bitcoin market surpassed $30k and boasted its strongest quarterly returns (+70%) since the all-time high in October 2021. Weekly returns have also reached +36% for the second time (top chart above), reaffirming Bitcoin’s position as the top-performing asset class year-to-date. This impressive market performance in 2023 is a noticeable departure from 2022 and indicates a promising regime shift.

Glassnode delves into various on-chain indicators that support this idea and aids in determining whether a resilient recovery from a bear market is underway and if the bear market is possibly a thing of the past. One of the more noticeable moves in the premier digital assets in the past two years has been its correlations with different assets.

Post-pandemic, Bitcoin acted more like a risk asset, moving in tandem with U.S. stocks. While this coupling and decoupling have happened during BTC’s short history, another correlation shaped up recently — one which supports Bitcoin’s narrative of being a hedge against risk-off events. This has been evident in BTC prices, relative to Gold — the traditional sound money safe haven.

Over the past 30, 90, and 365 days, the correlation between these two assets has been highly positive, even during the recent US banking crisis a few weeks ago. This indicates that investors are increasingly prioritizing both sound money and the potential risks associated with counterparties.

Although Bitcoin and digital assets are prone to market volatility, a number of on-chain indicators — which represent collective human decisions — have remained remarkably consistent. According to Glassnode (bottom chart above), several on-chain indicators are pointing to a potential end (or at least a significant improvement) of bear market conditions.

Bitcoin is currently in a somewhat neutral position, trading above the supply cluster formed between $16k to $25k, where a significant amount of coin volume was exchanged. We observe that many of these coins are being held tightly by buyers, while profits are being taken, and network utilization is improving. All of these factors support Bitcoin’s strong market performance so far this year.

Originally Published on Medium

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FKlivestolearn

I am a prolific Blogger on Substack/Medium with a newsletter. Extensive trading experience in Forex & Stocks based on technical studies. Cryptocurrency trader and Enthusiast, Blockchain/Fintech Evangelist & generally just a Technology Freak.