#Bitcoin quotes have reached their highest point since the beginning of the year, breaking key barriers around $28,000, both from a technical (200D MA, 200W MA) and on-chain perspective (coin "cost basis"). This analysis comes from #Glassnode
The breakthrough of these levels has shifted a significant portion of the supply into a positive position, forming the foundation for a renewed upward trend in 2023. These surpassed metrics will serve as crucial benchmarks in the coming weeks, as explained by specialists.
The technical analysis of digital gold is depicted below. The following chart illustrates Bitcoin's price dynamics, along with the True Market Mean Price indicator developed in collaboration with ARK Invest ($29,820).
This indicator reflects the average price at which the last transactions took place, including those that changed hands within a specific timeframe. Historically, Bitcoin has traded half of its "life" above this level and the other half below it. The current price has also exceeded the "traditional cost basis" of coins acquired by speculators. Their "paper" profit has reached around 20%. The chart below shows the #MVRV ratio for this market segment, with red indicating periods when the market traded below the base cost and green indicating periods when it traded above it. A similar pattern emerges with the #SOPR indicator, which characterizes the profitability of spent coins. Just like with MVRV, speculators have started closing their positions in a "positive" territory.
Due to a relatively smaller slump compared to 2021-2022, short-term investors did not experience the same panic and fear typical of the previous bear market in 2022. Analysts view this as a sign of speculators' resilience.
Overlaying the two aforementioned metrics allowed analysts to create an oscillator that reflects investor confidence. At present, the #indicator

has rebounded to a neutral level and is on the verge of entering a positive zone, where the "cost basis" of spent coins will surpass that of Bitcoins held in wallets. The rally in digital gold has put coins held by hodlers into a positive position. Their share has increased from 57% to 81%. In absolute terms, this figure has risen by 4.7 million BTC, equivalent to 24% of the current supply. These metrics provide insight into how many coins were added to wallets within the $27,000 to $35,000 range. The surge in prices did not trigger a strong reaction among long-term investors. The number of coins they own reached a new all-time high of 14.899 million BTC. The ongoing growth of this metric indicates that a larger supply is maturing into "hodler conditions" than is being spent.
Approximately 29.6% of the supply is held at a loss - a historically high value for this metric, considering the strong upward trend in the market since the 2022 lows.
"This suggests that hodlers may be more 'seasoned' and 'resilient' compared to previous cycles," experts noted. The driver of the improved sentiment is the expectation of Bitcoin ETF approval.
On October 23, BlackRock's proposed instrument, iShares Bitcoin Trust, appeared on the DTCC asset list for which the company provides post-trade, clearing, and settlement services.
Recall that Matrixport analysts predicted the rise of digital gold to $42,000-56,000 if the product is approved. CryptoQuant received figures of $50,000-73,000.
Earlier, Glassnode experts, based on an assessment of capital movement between hodlers and speculators, concluded that the current structure of the first cryptocurrency market is similar to the recovery phase after periods of bear dominance in 2016 and 2019.

Introduction:

In the world of cryptocurrency, skepticism and fear of uncertainties are common. However, ignoring fundamental on-chain data would be a mistake. Let's examine two crucial on-chain datasets, the MVRV (Market Value to Realized Value) and Average Realized Price, to gain insights into Bitcoin's current market phase.

Short-Term Supply Groups (1 day to 6 months):

a. Historical Bear Market Behavior:

During bear markets, #Bitcoin market price consistently remains below the 1D-6M Average Realized Price, acting as absolute resistance. Conversely, during recovery phases transitioning to a bull market, this level becomes a solid support, aiding in price recovery.

b. Short-Term MVRV (1D-6M) Indicator:

The Short-Term #MVRV (1D-6M) acts as the boundary between bullish and bearish sentiment. Whenever Bitcoin's price approaches this indicator, positive responses are observed, reinforcing its significance in price movements.

Medium-Term Supply Groups (6 months to 2 years):

a. Confirming Bull Market Phases:

Similar to short-term analysis, the Medium-Term Average Realized Price plays a crucial role in confirming bull markets. For Bitcoin to enter a #BullMarket officially, it requires a sufficient accumulation period to gather momentum and break through this mid-term resistance.

b. Medium-Term MVRV (6M-2Y) Indicator:

As with its short-term counterpart, the Medium-Term MVRV (6M-2Y) indicator serves as the boundary separating bearish and bullish conditions.

Current Market Analysis:

At present, we observe similarities between the current market phase and the recovery phase around late 2015 and early 2016. For Bitcoin to solidify its return to a bull market, it needs a prolonged accumulation period to overcome the medium-term average realized price resistance.

On-Chain Data:

Short-Term Supply Group Data:

STH Avg Realized Price: $28,000

STH MVRV: 1.04

Medium-Term Supply Group Data:

Medium-term Avg Realized Price: $30,300

Medium-term MVRV: 0.96

Conclusion:

Considering the historical behavior of Bitcoin's market phases based on the MVRV and Average Realized Price, the current data indicates a potential recovery phase and an impending return to the bull market. However, a sustained accumulation period is necessary to gain enough momentum to overcome the medium-term resistance. Monitoring short-term data for positive responses can provide additional insight into Bitcoin's price movements during this crucial juncture. As always, on-chain data should not be ignored as it provides valuable insights into the cryptocurrency market's underlying fundamentals.

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Source:- CryptoQuant

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