4 On-Chain Metrics Show Bitcoin Price Is Due For Bullish Explosion
In the midst of recent macroeconomic extremes, Bitcoin has maintained a quiet posture, almost creepy to its HODLers. Nevertheless, the hashrate and accumulation are increasing – what could this mean for the price?
Bitcoin has been consolidating in a narrow range between $18,800 and $20,200 since the mid-September price drop. In volatile markets like cryptocurrency, similar quiet periods of consolidation are rare.
Recent Glassnode findings show that the current BTC price action is similar to both pre-crash November 2018 and pre-rally March 2019. Despite the price decline, mining and accumulation statistics are improving. Let’s look at what this means for the health of the network.
Bitcoin hashrate makes new ATH
Last week, the Bitcoin hash rate hit a new all-time high of 242 exahashes per second.
In the chart below, we can see that Bitcoin’s long-term, slower hash band was once again overtaken by the faster band, indicating improved mining conditions in late August. Since the price did not see any major uptick during this time, the increase in hashrate was likely due to more efficient mining hardware and more mining rigs working in general.
Historically, these hash band moving average swaps precede gains. Historically, when the hash rate drops and then recovers, large BTC prices have been made.
Is a price rock bottom?
Aside from the hashrate, Bitcoin accumulation levels also hit a 7-year high. CryptoQuant data shows that 6-month-old and older Bitcoins now account for 74% of the realized limit. During the lows of 2019 and 2015, this score was 70% and 77% respectively.
Finally, for the first time in this cycle, the percentage of supply in losses has reached the 50% level.
CryptoQuant data shows that price bottoms during previous cycles normally occur when the percentage of supply in loss reaches 50% or more.
The current data shows the highest percentage of losses at 52% on the daily chart, 50.4% on the weekly (7DMA) and 48% on the monthly (30DMA).
Although quite a few metrics suggest that BTC should be near a bottom, overall momentum will likely still depend on macroeconomic conditions as well as its correlation with the Nasdaq and S&P 500.
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