New Bitcoin Bull Run on the Way as Macro Conditions and On-Chain Line Up
Bitcoin showed some on-chain evidence that a bull cycle has started.
Key Takeaways
- Bitcoin is following a four-year business cycle and is ready for bullish moves
- On-chain indicators MVRV and VWAPR support this claim
- Chart analysis points out at bearish near-term price action
Kevin Kelly , co-founder of Delphi Digital, perceives a recent shift in a pivotal U.S. manufacturing index as a potential precursor to a crypto upswing and pointed out that many on-chain indicators suggest the start of a new crypto bull cycle.
In a Twitter (X) thread , he said: “BTC price peaks occur around the same time the ISM shows signs of topping out. Active addresses, total transaction volumes, total fees — they all peaked alongside tops in the ISM too.”
Drawing a connection between the business cycle and the crypto market, Kelly elucidated that crypto market rebounds usually mirror signs of recovery in the business sector.
He said, “Turning points in the business cycle have historically been ripe opportunities to increase risk exposure,” before adding, “It looks like the ISM is nearing the final stages of its two-year downtrend, which again risk assets have been sniffing out.”
Are there any other on-chain indicators that signal Bitcoin is starting its bull cycle?
On-Chain Indicators
One of the most reliable metrics for spotting Bitcoin tops and bottoms has been the Market Value to Realized Value ratio. This metric is a ratio between Market capitalization and Realized capitalization. Realized capitalization approximates the value paid for all coins in existence by summing the market value of coins at the time they last moved on the blockchain.
As you can see from the chart above, we have drawn black lines between MVRV and price tops and red lines to its correlated bottoms. In June last year, MVRV reached a key horizontal level of 0.76, last seen in December 2018 when the previous bull run started and was. Last June, it was even slightly lower than in March 2020 when the bull market really took off.
It reached the value of 1.53 in mid-April, reminiscent of June 2019 when the price of Bitcoin made a first bull market high.
The next one would be the Volume-Weighted Average Price Ratio (VWAPR). The volume-weighted average price is a moving average that considers the trading volume as it divides the price in the trading session with the volume to come up with an average price.
The chart above shows that every time the Bitcoins price went below the VWAP (red circles), we saw the accumulation zone starting. This is also the case up until June last year. On the other hand, the WWAP ratio fell last June to its significant horizontal levels that have proven to indicate the bottom area.
VWAPR made a higher low, but a higher low was also me in December – February 2019 compared to February – August 2015.
Conclusion
There is some on-chain evidence to support the assumption that from June last year, the price of Bitcoin has started its bull market cycle. As we have seen a price increase that recovered it by 100% until April, this rise would be its first impulsive wave.
In some of our previous analyses, we have pointed out that if Bitcoin started its bull cycle, then we need to see the first major correction establishing the first bull market higher low, similarly to how we say in March 2020 compared to February 2019.
Since we are talking in the macro term, we are still yet to validate this possibility by some near-term price action as there is still a bearish scenario to be invalidated.
Disclaimer
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
