Numerous technical and on-chain indicators have started flashing green, suggesting that the bear market of 2022 might be ended, in the wake of the significant rise in the price of Bitcoin since the beginning of the year. For instance, the world’s largest cryptocurrency by market capitalization, Bitcoin, has recently broken back to the north of its 200-Day Moving Average and Realised Price, both of which are just under $20,000 after it recovered above $21,000 from its end of 2022 levels around $17,000.
The 30-day simple moving average (SMA), which frequently shifts at the beginning of a Bitcoin bull market, recently crossed the 200-day SMA, signalling a recent improvement in momentum in new addresses.
Bitcoin appears to be following a long-term market cycle that repeats itself roughly every four years, according to analysis from the fictitious Twitter account @CryptoHornHairs. After a 364-day decline, according to @CryptoHornHairs, Bitcoin is now entering the bullish stage of the cycle.
The key indicator, however, is not flashing green. Not yet
Investors should be aware that one important on-chain indicator is not giving off bullish signals. The 2-year Z-score for Glassnode’s Revenue from Fees Multiple is still negative, hovering at -0.41. The number of standard deviations above or below the mean of a data sample is known as the Z-score. The amount of standard deviations above or below the mean Bitcoin Fee Revenue over the last two years is what makes up Glassnode’s Z-score in this case.
The crypto analytics company claims that “a sustained increase in fee revenue as a percentage of the total reward indicates that Bitcoin blocks are full, and there is growing demand for transaction activity.” Due to Bitcoin’s limited blocksize, this has historically served as a useful early indicator of a macro trend shift in the network demand profile.
Because it suggests insufficient on-chain activity, Bitcoin’s sluggish Fee Revenue momentum should raise a red flag for bulls. History has demonstrated, however, that this signal has the potential to suddenly change for the better. All it might take is for Bitcoin to maintain its upward trend in the coming weeks and months to cause some FOMO among institutions and the general public, and on-chain activity might start exhibiting clear signs of a recovery.