As Bitcoin fluctuates modestly from its levels of last week, certain on-chain metrics indicate that the next two years could be highly bullish for the largest cryptocurrency by market capitalization, potentially leading to new all-time highs.
According to a recent crypto analytics firm CryptoQuant observation, Bitcoin’s current accumulation rate is higher than the 2018 bear market. Since Bitcoin hit $69,000 and the bear market began around a year ago, the crypto sector has been met with several unanticipated challenges, such as the pandemic, fears of inflation, and the Russo-Ukrainian conflict. This has caused the financial markets to be dominated by doubt and fear, leading to severe deleveraging.
As per the firm, the lengthy bear market has caused a substantial buildup of coins, evident from the Realized-UTXO Age Bands. This metric shows coin groups based on their lifetimes and their share of the total realized cap. Currently, the metric indicates that the number of coins with a lifespan of more than one year has grown steadily, resulting in a large amount of market accumulation.
“Even though the price dropped significantly below $20K recently, the accumulation rate appears to be higher than the previous bearish phase of 2018, suggesting that Bitcoin remains a valuable asset for many market participants. Once the market has reached a long-term bottom, it will undergo a substantial bullish run.” Wrote the firm.
On Thursday, popular pseudonymous crypto analyst “Ali” also shared a chart which shows the 7-day moving average (MA) Bitcoin Puell Multiple has hit a 14-month high.
The “Puell Multiple” is a metric that calculates the ratio between the daily earnings of Bitcoin miners in USD and the 365-day moving average.
This metric has been used to identify Bitcoin bear markets, as miners are always subject to the same costs, such as electricity. Therefore, their actions are somehow connected to the price of Bitcoin.
Comparing miners’ short-term revenue to their 365-day average, Puell Multiple reveals the miners’ future behaviour. Since November 2022, miners’ revenue has doubled, indicating that values above 1.00 signify potential future price increases. This may cover mining costs and reduce the need to sell BTC, hence lessening selling pressure.
“The Bitcoin Puell Multiple signals the beginning of a bull market! Each time the Puell Multiple has moved above the 1 level since 2015, BTC tends to go parabolic. Notice that this metric recently moved above the 1 mark, which could lead to a new BTC bull run.” Wrote Ali.
At press time on Friday, Bitcoin was trading at $23,444 after a 2.17% drop in the past 24 hours, according to CoinMarketCap data.