Bitcoin is about to reach a new high. These 10 pictures will help you find the "wealth password"

Original title: Bitcoin Onchain Data Update

Original author: MICHAEL NADEAU, The DeFi Report

Original compilation: Frank, Foresight News

Bitcoin rose 45% in February. Since the launch of the spot Bitcoin ETF, we have seen more than $6.7 billion in net capital inflows into the new ETF product. The current Bitcoin price is also higher than historical The highs are less than 10% apart, but the market feels eerily quiet.

My intuition is that incremental retail investors have not yet entered the market. Why? Because so farI haven’t had a random conversation about cryptocurrencies with anyone in my daily life, including Didi/taxi drivers, hairdressers, college students, estate sales, neighbors, friends/family.

The largely muted response made me realize that we are still in the early stages of a new cycle - one that is crypto-native Users account for the majority of market participants and have initially realized that we have entered a bull market.

However, when we look at on-chain data, there is no need to rely on intuition and intuitive feelings. To be honest, sometimes with the help of on-chain data, I feel as if I have inside information. Of course, I still remind myself that the public chain is transparent... It happens that when it comes to cryptocurrency and on-chain data, we It's still early days, and the market doesn't quite know what signals to look for yet.

But this certainly won’t last forever, so let’s enjoy it while it lasts. So in this report, we’ll take a quick look at where we are in the current cycle using purely on-chain signals, including:Market indicators, long-term Holder behavior, miner behavior, exchange balances, and Leverage data and more.

The ratio of total market capitalization to realized market capitalization

The first is the total market capitalization to realized market capitalization Ratio of (MVRV) – As the name suggests, theMVRV ratio measures realized market capitalization (representing the underlying cost of all Bitcoins in circulation) relative to the current total market value, which is the market’s favorite top and One of the bottom signals.

Foresight News Note, the realized market capitalization is calculated based on the price of each Bitcoin at the time of its most recent move, which takes into account all on-chain transactions. The final price can be regarded as a more "true" long-term measure of Bitcoin's value and can more accurately reflect Bitcoin's market capitalization.

What is the situation now? MVRV has just hit 2, which is consistent with the early stages of the past few bull-bear cycles and suggests the bull cycle is just beginning, having previously peaked at 7.6 in 2021 at the peak of the bull market.

When the orange line in the above chart is close to the red horizontal area, it means that the market has reached the expected price high, but it is still far from reaching it. To that extent.

What the average retail investor needs to remember is that the only way to make money investing in cryptocurrencies is to buy good cryptocurrencies when everyone wants to get out. And in the chart above, these are the periods when the orange line touches the green horizontal area.

So in the last bear market, everyone had 6 months to accumulate their chips, and those who really did so were already in Bitcoin The currency has increased by 2-4 times.

Bitcoin Dominance

Historically, Bitcoin has often been the first to get out of the bear market cycle trough in the crypto market and enter the next bull market. At the beginning of a bull market cycle, Bitcoin's dominance will gradually weaken as the wealth effect begins to take effect and long-term holders will turn to other cryptocurrencies to obtain more profits.

So what did we see today? Bitcoin’s dominance is rising, once again leading the market out of the bear market and now accounting for 51% of the cryptocurrency’s total market capitalization. This also once again confirms that the market is in the early stages of a bull market. For reference,In the previous cycle, Bitcoin reached 70% dominance before the beginning of the "Altcoin Summer". The market will certainly not replicate this data exactly, but expect Bitcoin’s dominance to continue to grow as it approaches all-time highs.

Long-term Holder holdings

The current long-term Holder holdings are 14,658,031 Bitcoin, accounting for approximately 74.6% of the circulating supply. To be clear, Glassnode defines long-term holders as Bitcoins from on-chain addresses that have not moved for more than 155 days.

This is the "smart money" of Bitcoin, such as those who buy at cycle lows and have long-term Hold beliefs. We can see in the chart that as each cycle heats up, this group tends to reduce their holdings, as shown in the chart above, where the orange line starts to fall.

Changes in long-term Holder net position

Looking at changes in long-term Holders’ net positions, we see the first wave of long-term Holder selling since the market bottomed in December 2022, Again, this is consistent with the early stages of a bull market.

Let’s change the perspective and see what the miners are doing.

Changes in miners’ net positions

What are the miners doing?

They have been selling BTC during the recent rally. In fact, miners have been selling an average of 4,802 Bitcoins per day since early November.

Considering that the entire Bitcoin network can only mine 900 Bitcoins per day, over 4,800 Bitcoins is already considered a considerable amount of selling.

Why is there so much selling pressure? We believe that mining companies are strengthening the company's capital reserves before the halving - after all, halving also means that the revenue of mining companies is halved, so it is undoubtedly a wise move to sell early to make financial preparations.

What is even more surprising is that even under such continued selling pressure, the price of Bitcoin is still rising strongly.

The reason behind this is naturally inseparable from new financial products with liquidity such as spot Bitcoin ETF...

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Spot Bitcoin ETF net inflow

In total,spot Bitcoin ETFs have attracted more than $6.7 billion in inflows, and all ETF funds currently hold 753,145 Bitcoins, accounting for 3.8% of the circulating supply.

Transaction Balances

Bitcoin appears to be becoming increasingly "illiquid" asthe amount available on exchanges currently only accounts for the circulating supply of 11.7%, the lowest level since late 2017.

Perpetual contract funding rate

The funding rates for Bitcoin perpetual contracts on various exchanges have also begun to heat up, but they are certainly far less than the peak levels of the previous bull market cycle.

Open positions

Bitcoin open interest on various exchanges has also begun to approach the peak levels of the previous bull market cycle - this is important data to watch in the short term.

Stock to flow ratio (Stock to Flow, S2F)

Stock to Flow (S2) is a classic model. According to its data fitting,in 2 In a few months, Bitcoin will be the scarcest asset on earth – with a stock-to-flow ratio of over 120.

As we see in the chart As you can see, Bitcoin’s cycles have been remarkably stable since its inception – visualized here with a logarithmic chart, and the colors represent the number of days until the next halving date.

Summary

Bitcoin has entered a bull market, but we are in the early stages. Incremental retail investors have yet to enter the market in large numbers, and this time, institutions are buying Bitcoin in large quantities ahead of their FOMO.

So how do we determine the large-scale entry of retail investors? The following signs may be details worth paying attention to in the future:

· Media coverage of Bitcoin and cryptocurrencies has repeatedly appeared in the press;

· The Coinbase app is ranked #1 (or close to #1) in the App Store, currently it is ranked 186;

· Google searches for Bitcoin and cryptocurrencies Exponential growth;

· YouTubers promoting junk coins are seeing a surge in subscribers;

· Celebrities and politicians will support Bitcoin and cryptocurrencies;

· Your friend who knows nothing about cryptocurrencies is bragging about how much money he’s making;

· Your cousin told you that he bought "Japanese Bitcoin";

· Didi drivers, village aunts and barber Tony kept discussing money-making projects in the Cardano ecosystem;

· The founders of Web2, who learned about cryptocurrencies a few months ago, are raising funds for new cryptocurrency projects.

Fortunately, we are not there yet.

Remember, Bitcoin leads the way, altcoin summer is coming later and a big pullback is expected - as was the case during the last bull cycle There have been 6 corrections exceeding 30%.

Wish us good luck.

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