3 Reasons Bitcoin May Have Thawed This Crypto Winter

Bitcoin (BTC -3.61%)which is up more than 60% this year, just experienced its best week since December 2020. While stretches like this often lead investors to expect some sort of correction, there’s good reason to believe this could just be the beginning of a new bull market.

Fortunately, because blockchains are open and transparent, data can be extrapolated to show activity. Three metrics gleaned from Bitcoin’s blockchain activity suggest the worst of this latest crypto winter may be behind us.

Key indicators are back in bull market territory

Since a blockchain is essentially just a place for users to perform transactions, it makes sense to measure activity by evaluating the number of new users and the number of transactions. From this angle, the simple concept of “more is better” generally applies.

When you take a look at both of these, one thing becomes clear – today they are at levels not seen since Bitcoin’s price was well within the territory of the previous bull market.

Rather than looking at the number of total addresses on the Bitcoin blockchain, it is more beneficial to measure the rate at which new addresses are added. Based on recent data, the number of new addresses joining the network appears to be as high as it was in the spring of 2021, when Bitcoin went on a run to as high as $63,500. With approximately 122,000 new addresses per day, it is the current rate of new units added to the network is higher than in 90% of the days Bitcoin has existed.

With an increase in the number of users on the network, the number of transactions has also skyrocketed. As well as addressing growth, the number of transactions is at levels not seen since Bitcoin was near its all-time highs. Today, the number of daily transactions is just 310,000 and has averaged more than 8.5 million per month to start 2023. The last time they were this high was in March 2021.

There is one more rather obscure metric that deserves to be addressed: miner revenue from fees. While this metric flies under the radar, profitability from fees (rather than the usual mining reward) usually reflects the state of the market as a whole. When profitability from fees is negative, Bitcoin has usually found itself in the middle of a bear market. But when profitability changes, bull markets usually come – and for the first time since the summer of 2021, miners are in the green.

Create a game plan

Given these metrics, it’s hard not to be excited about Bitcoin’s future. For the first time in nearly two years, there is tangible reason to be optimistic that this crypto winter may thaw.

For potential investors, however, there is even better reason to be excited. While address growth, number of transactions and miner income from fees are at levels not seen since Bitcoin’s price was close to $60,000, today’s price is less than half of that. If this momentum were to hold, buying Bitcoin today while the price is still far from its all-time high could prove to be a lucrative decision.