4 Out Of 10 Bitcoin Indicators Confirm End Of Bear Market

After Bitcoin has staged a considerable rally of 29% because the starting of the 12 months, investors are speculating about whether it is a bull trap or actually the start of a brand new bull market. Currently, there continues to be loads of skepticism amongst analysts about whether Bitcoin has really found its bottom.

To reply this query, the renowned on-chain evaluation company Gassnode published today a listing of 10 indicators to reply essentially the most pressing query of all. As the corporate notes, there may be “no single silver bullet to perform this task.”

Nevertheless, the ten indicators can provide a clue as as to whether Bitcoin is nearing the top of its bear market. In keeping with Glassnode’s evaluation, 4 indicators already confirm the top, while two indicators are “in progress,” and 4 indicators in turn haven’t yet been triggered.

Bullish Indicators For Bitcoin

The primary indicator, which has already been triggered, is Realized Cap HODL Waves (LTH). The indicator states that historically, an intersection between the Realized Price * 0.7 and the 200D SMA * 0.6 price model occurs in the course of the lowest phases of bear markets.

Realized Cap HODL Waves | Source: Glassnode

A second indicator that the bear market is ending is a healthy increase in miner revenues, signaling a competitive fee market. In keeping with Glassnode, the 90-day SMA of miner fee revenue has exceeded the 365-day SMA. This implies that there’s a “constructive uptick in blockspace congestion.”

Also fully confirmed is the Long-Term To Short-Term Profitability Indicator. The metric signals that numerous coins have modified hands at low prices. This creates a “solid foundation” for bull cycles as this creates a realignment of the common market cost base to cheaper and lower prices.

Bitcoin Long-Term To Short-Term Profitability
Bitcoin Long-Term To Short-Term Profitability | Source: Glassnode

Last but not least, the “Bitcoin Cycle Change Detection Indicator” has also been fully triggered. The metric shows that the purpose has been reached where the correlation between price depreciation and provide in profit is diminishing, indicating saturation by price-insensitive holders.

Cycle Change Detection Indicator
Cycle Change Detection Indicator | Source: Glassnode

Within the technique of being confirmed is the Recent Address Momentum indicator, which shows a sustainable market recovery attributable to the rise in network activity. In keeping with Glassnode, this happens when the 30-day SMA of recent addresses exceeds the 365-day SMA and holds for not less than 60 days.

“An initial burst of positive momentum occurred in early November 2022. Nevertheless, this has been sustained for under one month to date,” says Glassnode.

Also not yet confirmed is the Supply Stress Ratio Indicator. In deep bear market phases, this metric reaches a drastic drop below 1.0, reflecting that the “weak hands” are being flushed out of the market.

The “ratio is currently throughout the peak market stress regime that has historically been sufficient to shake out a majority of investors,” based on the research firm.

Indicators For A Bearish Scenario

Against an imminent end of the bear market speaks the broader recovery of activity by smaller and bigger entities. As usual for a bear market, the Relative Activity Of Large And Small Entities indicator still shows a major decline in on-chain activity by entities of all sizes (threshold 1.2).

Relative Activity Of Large And Small Entities
Relative Activity Of Large And Small Entities | Source: Glassnode

Also, the evaluation of the realized profit and loss shows the still bearish stage of the market. Because the 30-day SMA of the realized P/L ratio has not yet recovered above 1.0, this means that demand shouldn’t be yet capable of absorb the profits taken.

The same picture is painted by the aSOPR, which monitors profitability based on output spent and signals that there was no trend shift yet.

Bitcoin Realized Profit/Loss
Bitcoin Realized Profit/Loss | Source: Glassnode

Last but not least, based on Glassnode, confidence in a trend reversal on the chain has not yet been observed. That is reflected in spending patterns.

One approach to measure that is to check the quantity of unrealized profit held inside newly acquired (and HODLed) coins to that being realized by spent coins. The indicator has not yet been triggered but is near a positive breakthrough.

At press time, the BTC price traded slightly below the crucial resistance at $21,500.

BTC USD
BTC trading below key resistance, 4-hour chart | Source: BTCUSD on TradingView.com

Featured image from Kanchara / Unsplash, Chart from TradingView.com

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