Recent crypto rally is not convincing enough to call another Bull Run yet, says research firm Glassnode
Crypto analytics firm Glassnode is not yet convinced that crypto is on the road to recovery after the recent market rally.
In a new analysis, Glassnode notes that on-chain Bitcoin (BTC) transaction demand remains “low at best.”
“The net result is that Bitcoin blocks are partially empty, Ethereum gas prices are at multi-year lows, and the burn rate for EIP1559 is at an all-time low.”
The research firm notes that on-chain Bitcoin transaction fees are “stuck within the bear market” due to the low level of transaction demand. Glassnode says that when fees go up, it can be an early indicator that the crypto market is recovering.
BTC is trading at $22,816 at the time of writing. The top-ranked crypto asset by market capitalization is down nearly 2% in the past 24 hours.
Glassnode also notes that both Bitcoin and Ethereum (ETH) have seen some encouraging gains in terms of used output profit ratio (SOPR).
“Attention can now shift to whether these uptrends can be sustained and improved, as a gauge of whether this is simple relief in the bear market, or a more constructive structural shift.”
The SOPR on-chain calculation determines whether crypto traders are selling at a profit or a loss. If the SOPR is greater than 1, the holders of the asset are selling at a profit. Otherwise, they sell at a loss.
Explains the research firm,
“For Bitcoin, SOPR is trying to break above 1.0 for the second time since early June. Typically, the market requires a series of attempts before escape velocity can be reached. An ideal bullish scenario would be a break above 1.0, and then a retest, to find support.
Ethereum has had more luck, piercing above a SOPR value of 1.0, finding its first retest as support.”
ETH is trading at $1,614 at the time of writing. The second-ranked crypto asset by market capitalization is down more than 2% in the past 24 hours.
Read Glassnode’s full analysis here.
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