Bitcoin’s recent price action has been nothing short of exhilarating, but beyond the market buzz lies a wealth of on-chain data offering deeper insights. By By analyzing metrics such as network activity, investor sentiment and BTC market cycles we can gain a better understanding of the current state of the cryptocurrency market. Bitcoin's current position and potential trajectory.
Plenty Of Upside Remaining
The MVRV ZScore Compares Bitcoin's market cap, or price multiplied by circulating supply, with its realized cap, which is the average price at which all BTC were last transacted. HistoricallyThis metric signals overheated market conditions when it enters red zone. The green zone indicates widespread losses and possible undervaluation.
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Currently, despite Bitcoin's rise to new all-time highs, the Z-score remains in neutral territory. Previous Z-scores reached highs of up to 10, well above the current average of around 3. If History repeats itself, and this suggests that there is significant room for price growth.
Miner Profitability
The Puell Multiple To determine miner profitability, compare their daily USD revenue to the previous one-year moving median. Post-halving, miners’ earnings dropped by 50%, which led to a multi-month period of decreased earnings as the BTC price consolidated for most of 2024.
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Yet even now, as Bitcoin The multiple shows that profitability has only increased by 30% compared to historical averages. This According to the data, we are still in early to mid-stages of the bull market. And when we compare the patterns in the numbers, we can expect explosive growth comparable to that seen in 2016 and in 2020. With After a reset of halving, consolidation, then a reclaimation at the 1.00 multiple level, signifying the exponential phase in price action.
Measuring Market Sentiment
The Net Unrealized Profit The following are some examples of how to get started: Loss (NUPL) metric quantifies the network's overall profitability, mapping sentiment across phases like optimism, belief, and euphoria. Similar MVRV ZScore It is calculated from the value realized or the cost basis of investors. This looks at all holders’ current estimated profit or loss.
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Presently, Bitcoin remains in the ‘Belief’ zone, far from ‘Euphoria’ or ‘Greed’. This The data is consistent with other data that suggests there is still room for price appreciation. Especially This metric is still lower than it was earlier this year. March We set the previous all-time record.
Long-Term Holder Trends
The The percentage of the total amount Bitcoin 1+ is a representation of a series of events that have lasted for more than a year. Year HODL WaveThe rate of, still remains high at 64%, higher than any other time in history. Bitcoin History before this cycle Prior As long-term investors began to realize profits, the price peaks of 2017 and 2021 fell to 40% and 53% respectively. If If something similar happened during this cycle, we would still have millions to transfer to new market participants.
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So So far, only 800,000 BTC have been transferred from the Long Term Holder Supply Newer market participants are expected to emerge during this cycle. In past cycles, up to 2–4 million BTC changed hands, highlighting that long-term holders have yet to cash out fully. This The current bull run is in its nascent stage.
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Tracking “Smart Money”
The Coin Days Destroyed Transactions are weighed by the duration of coin holding, which emphasizes whale activity. We Multiply the value of the BTC at the time by the price. Value Days Destroyed (VDD) Multiple. This This gives us a clear indication of whether the biggest and most intelligent BTC holders have begun to make profits on their positions.
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Current Levels remain well below the red zones seen at the top of markets. This means whales and “smart money” are not yet offloading significant portions of their holdings and are still awaiting higher prices before beginning to realize substantial profits.
Conclusion
Despite The rally’s on-chain metrics strongly suggest that Bitcoin It is not overheated. Long-termholders remain largely steadfast. Indicators like the MVRV-Z-score, NUPL and Puell Multiple All of these areas have room for improvement. That Accordingly, profit-taking by some market participants and the entry of new players could indicate a transition from a mid- to late-cycle stage, which may last until 2025.
For Investors should remain data-driven. Emotional FOMO, euphoria and other emotions can lead to poor decisions. InsteadFollow the underlying data fueling Bitcoin Use tools such as the metrics discussed above for your own analysis and investing.
For Check out this recent YouTube video for a deeper look at the topic. What's Happening On-chain: Bitcoin Update
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