The Bitcoin bull market is still alive and well.
Bitcoin has rebounded more than 20% in the past two weeks, back above $30,000, buoyed by optimism that the first U.S. spot bitcoin exchange-traded fund (ETF) could be imminent, with major financial institutions BlackRock and Fidelity throwing their hats into the ring with the application.
The rebound from the earlier monthly lows below $25,000 confirms that the uptrend into 2023 remains intact, with bulls now targeting the next move up to the near-term price target of the mid-to-upper $30,000s.
But signals about the strength of Bitcoin’s bull case come from more than just the cryptocurrency’s impressive price action.
On-chain indicators are also sending strong bullish signals.
Take, for example, on-chain analytics firm Glassnode’s widely followed “Recovering from the Bitcoin Bear Market” dashboard, which consists of eight on-chain and technical indicators.
Currently, all eight indicators are signaling a strengthening market, which, according to Glassnode, means there is a strong chance that “Bitcoin is experiencing a period of relative market strength.”
A range of on-chain indicators hint at a bull run
Glassnode’s “Recovering from the Bitcoin Bear Market” dashboard tracks eight metrics to determine if Bitcoin is trading above key pricing models, if network utilization is increasing, if market profitability is recovering, and if the balance of Bitcoin wealth denominated in U.S. dollars favors long-term long-term holders.
When all eight are flashing green, this has historically been a strongly bullish signal for the Bitcoin market.
Currently, all eight lights are flashing green.
Bitcoin is trading comfortably above the top two 200-day moving averages and realized prices.
Many view the breakout above these key levels as an indicator that near-term price momentum is shifting in a positive direction.
A few months ago, the 30-day SMA for new Bitcoin address creation crossed above the 365-day SMA, indicating that the rate at which new Bitcoin wallets are being created is accelerating. Historically, this has happened at the start of a bull run.
Meanwhile, revenue-to-expense multiples turned positive a few weeks ago.
The Z-score is the number of standard deviations above or below the mean of the data sample.
In this case, Glassnode’s Z-score is the number of standard deviations above or below the average Bitcoin fee revenue over the past 2 years.
This means that the third and fourth indicators, which are related to whether network utilization is trending positively again, are also sending bullish signals.
Next up are the fifth and sixth indicators related to market profitability, with the 30-day simple moving average (SMA) of Bitcoin’s realized profit and loss ratio (RPLR) indicator above 1.
This means that the Bitcoin market has realized a higher proportion of profits (in USD terms) than losses.
“This generally means that sellers of unrealized losses have become exhausted and there is a healthier inflow of demand to absorb profit-taking,” Glassnode said.
Therefore, the indicator continues to send bullish signals.
Meanwhile, the 30-day SMA for Bitcoin’s adjusted spending-output profit ratio (aSOPR), a metric that reflects the extent of realized gains and losses for all coins moved on-chain, is also above 1.
This essentially means that on average over the past 30 days, the market has been profitable.
Looking back at Bitcoin’s history over the past eight years, aSOPR has risen above 1 after a long period below 1, which is an excellent buy signal.
Finally, there are two final indicators concerning whether the balance of dollar wealth has shifted sufficiently in favor of holders to suggest that weak-hand sellers have been exhausted.
Glassnode says Bitcoin’s realized HODL multiple has been on an upward trend over the past 90 days, which is a bullish sign.
“When the RHODL multiple turns to an uptrend within a 90-day window, it signals that dollar-denominated wealth is beginning to shift toward new demand inflows,” the crypto analytics firm said.
Glassnode said this “suggests that profits are being taken away, the market is able to absorb them… (and) long-term holders are starting to spend tokens”.
Glassnode’s final indicator in its “Recovering from the Bitcoin Bear Market” dashboard is whether the 90-day exponential moving average (EMA) of Bitcoin supply profits has been in an upward trend over the past 30 days.
Profit supply refers to the amount of Bitcoin that last moved when the price in USD was lower than the current price, meaning they were bought at a lower price and the wallet is holding a paper profit.
This indicator light also flashes green.
How high can Bitcoin (BTC) go?
Analysis of Bitcoin’s long-term market cycles, which tend to last around four years, suggests that Bitcoin could be in the midst of a potential three-year bull run.
In the past three market cycles, each Bitcoin bear market lasted about a year, while each bull market lasted about three years.
If Bitcoin’s bear market from November 2021 (around the all-time high) to November 2022 (around the 2022 low) is over, then we may now be about six months into a new roughly three-year bull market.
The Bitcoin stock-to-flow (S2F) model suggests that a new bull run will occur around the Bitcoin halving event next year.
The Bitcoin market cycle is approximately four years, according to the Bitcoin Stock-to-Flow pricing model, which shows the estimated price level based on the number of Bitcoins available in the market relative to the number mined each year.
Bitcoin’s current fair value is around $55,000 and could rise to over $500,000 in the next post-halving market cycle, or about 18.5 times its current level.
Finally, Blockchaincenter.net’s popular Bitcoin rainbow chart shows that at current levels, Bitcoin is in the “buy!” zone, having recently recovered from the “basically sell” zone at the end of 2022.
In other words, the model suggests that Bitcoin is gradually recovering from being extremely oversold.
During the last bull run, Bitcoin was able to reach a “sell. Seriously, sell!” zone.
If it can repeat this feat within a year to a year and a half after the next halving, the model suggests that Bitcoin prices could be in the $200-300,000 region. This would be a gain of about 8-13x compared to current levels.