5 On-Chain Indicators Suggest Crypto Bull Market Just Getting Started
Is the Bull Market Just Getting Started?
Despite crypto markets having consolidated sideways for the past three months, at least five on-chain indicators suggest the bull market may just be getting started, according to an analyst. Since the end of February, the total market capitalization of crypto has been range-bound at around $2.5 trillion. Market observers are conflicted about whether the cycle is already over or not. These five on-chain indicators, as highlighted by analyst “ELI5 of TLDR” in an X post on May 19, suggest it is just beginning.
Bitcoin Dominance and Market Value Indicators
Historically, crypto bull markets start with a high level of Bitcoin dominance. On the other hand, when BTC dominance drops and altseason begins, it signals the next stage of the bull cycle. However, Bitcoin market dominance is still high at just over 56%, according to TradingView. The Bitcoin market value to realized value, along with its z-score statistical correction score (MVRV Z), compares the asset’s current market value or capitalization to its historical average value and usually tops at around six during cycle peaks. The score is currently less than three, according to LookIntoBitcoin.
Additional On-Chain Metrics
The Puell multiple is another metric that aligns with cycle peaks and has yet to do so. This indicator dropped below one after the halving on April 20, and peaks of over three usually coincide with cycle tops. Meanwhile, charts showing how much BTC is held by different cohorts based on hodl waves also look bullish for Bitcoin, according to LookIntoBitcoin. Realized cap hodl waves provide a macro view of the amount of Bitcoin held by recent buyers compared to longer-term holders.
The fifth bullish on-chain metric is the miner revenue per hash, which shows how much money miners are making. While it will trend down over time as network difficulty increases, spikes in revenue per hash have historically occurred during market cycle peaks.
Concerns and Overheating Indicators
A couple of on-chain metrics suggest that markets could be overheated and reaching the top. The realized hodl (RHODL) ratio compares the average price of recently bought coins to that of coins bought one to two years ago. If new buyers pay much more for BTC than longer-term holders, this could signal that the market is reaching a peak. The cumulative value-days destroyed (CVDD) metric also appears to have peaked, tracking the movement of coins as a ratio of the market age.
The Fate of Spot Ether and SEC Decisions
In January, the approval of spot Bitcoin ETFs came down to a five-commissioner panel. This week, the same five SEC Commissioners are set to cast their votes to either approve or deny VanEck’s spot Ether ETF on May 23. Commissioners like Hester Pierce and Mark Uyeda have shown support for digital assets, while Caroline Crenshaw has been critical of the crypto industry. Gary Gensler, SEC Chair, has been navigating the challenges of regulating cryptocurrencies amid market volatility.
Effect on Individuals and the World
Individuals involved in the crypto market may see increased volatility and potential opportunities for profit if the bull market continues. However, regulatory decisions like the approval or denial of spot Ether ETFs can also impact market dynamics and investor sentiment. In the wider world, the acceptance and regulation of cryptocurrencies by financial institutions and regulators can shape the future of digital assets as a mainstream asset class.
Conclusion
As on-chain indicators point towards the potential continuation of the crypto bull market, investors and market participants should stay informed and adapt to changing regulatory landscapes. The decisions made by regulatory bodies like the SEC can have a significant impact on market behavior and perceptions of cryptocurrencies. Continued monitoring of on-chain metrics and regulatory developments will be key in navigating the evolving crypto landscape.
