Bitcoin is Back Into Early Bull Market Territory: Glassnode

Bitcoin network activity is rising in a fashion similar to previous early-stage bull markets. 

As Bitcoin returns to a 9-month high above $28,000, a growing number of on-chain signs show the asset may be entering an early bull market.

On Monday, blockchain analytics firm Glassnode said the Bitcoin market “appears to be shifting gears” amid turmoil within the traditional banking system.

Reclaiming Momentum

According to the firm’s weekly report, Bitcoin’s monthly average transaction count reached 309.5k/day this week – its highest level since Bitcoin surged to $64,000 in April 2021. Less than 12.2% of all days experience more trades than this.

Meanwhile, over 122,000 new entities (a best estimate for unique new users) have been appearing on chain every day, which is higher than nearly 90% of all other days. Most of those days were concentrated around Bitcoin’s price peak in late 2017, and the 2020/2021 bull run.

"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.”

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. 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) – another encouraging sign that Bitcoin is back in bull territory.

Back Into Profit
Glassnode also delved into its Bitcoin’s MVRV (market-value-to-realized-value) ratio – a measure of the unrealized profit multiple held within the coin supply – 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, signalling a remarkable strength, and a reflection of the beliefs held about Bitcoin’s important role in the future of the global financial system,” Glassnode concluded.

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.