“Bitcoin’s Return to a 9-Month High Signals Early Bull Market” is a headline that signals a significant shift in the cryptocurrency market. As Bitcoin surpasses $28,000, a growing number of on-chain indicators suggest that the digital asset may be entering an early bull market. This article explores the latest developments in Bitcoin’s market momentum, including the increasing transaction count, rising new entity appearances on the chain, and the return of miner revenue to its highest point since June 2022. Additionally, we delve into Glassnode’s analysis of Bitcoin’s MVRV ratio and the role of Bitcoin in the global financial system amidst turmoil within the traditional banking system.
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Glassnode’s weekly report revealed that Bitcoin’s monthly average transaction count reached 309.5k/day this week, which is its highest level since Bitcoin surged to $64,000 in April 2021. Less than 12.2% of all days experience more trades than this. Additionally, over 122,000 new entities (a best estimate for unique new users) have been appearing on the chain every day, which is higher than nearly 90% of all other days.
“As more people interact and transact within the Bitcoin economy, it is typically associated with periods of increasing adoption, network effects, and investor activity,” wrote Glassnode. Rising activity is also driving network congestion and fee pressure, which Glassnode calls “a common precursor to more constructive markets.”
Back Into Profit
Glassnode delved into its Bitcoin’s MVRV (market-value-to-realized-value) ratio, which has risen to 1.36. After surpassing $27,000 this week, the ratio returned to its “neutral zone,” meaning prices are “no longer heavily discounted relative to the average on-chain market cost basis.” Although more coins are in profit, most HODLers still don’t appear to be selling their stash. The proportion of “hot coins” – coins transacted within the past 7 days – still remains “close to cycle lows.”
“Few longer-term investors appear to be motivated to take profits into this rally, signaling remarkable strength and a reflection of the beliefs held about Bitcoin’s important role in the future of the global financial system,” Glassnode concluded.
Miner Revenue Returns
After a string of insolvencies plagued the industry last year, miner revenue has now returned to its highest point since June 2022 ($22.6 million/day), which is another encouraging sign that Bitcoin is back in bull territory. While high network fees can make small transactions more costly, they’re also a boon to miners, who are receiving those fees for securing the blockchain.
Global Financial System Instability
The global financial system began to show cracks this month after the fall of Silicon Valley Bank (SVB) – the second-largest bank collapse in United States history. The Federal Reserve has since taken multiple measures to backstop commercial banks with liquidity, which have been bullish for the prices of both Bitcoin and gold.
Bitcoin’s return to a 9-month high above $28,000 is indicative of a growing number of on-chain signs showing that the asset may be entering an early bull market. Glassnode’s report reveals that Bitcoin’s monthly average transaction count reached its highest level since April 2021, with a higher number of new entities appearing on-chain daily. Rising activity is driving network congestion and fee pressure, which is a common precursor to more constructive markets. Moreover, Glassnode’s analysis shows that miner revenue has returned to its highest point since June 2022, another encouraging sign that Bitcoin is back in bull territory.
- What is the current price of Bitcoin?
The current Bitcoin price at the time of writing post was $27,994.09
- What is a bull market?
A bull market is a financial market condition where prices of assets, such as stocks, bonds, or cryptocurrencies, are on an upward trend for an extended period, typically accompanied by high investor confidence and optimism.
- What is the MVRV ratio?
The MVRV ratio is a metric used to measure the market value of Bitcoin compared to its realized value. It helps to identify when the price of Bitcoin is overvalued or undervalued.
- How do miners benefit from high network fees?
Miners benefit from high network fees because they receive those fees for securing the blockchain. The higher the fees, the more profitable it is for miners to validate transactions and maintain the network.
- What is the role of Bitcoin in the global financial system?
Bitcoin’s role in the global financial system is still evolving, but many believe it could become a viable alternative to traditional currencies and financial systems. It offers several advantages, including decentralization, security, and low transaction fees, that could potentially disrupt traditional financial systems. However, there are also concerns about its volatility and regulatory challenges that could limit its widespread adoption.
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