According to Coinmetrics, the market has been down for nearly seven weeks since the May 12 crash.
However, even though many big players lack interest in making large purchases, the on-chain indicators show what the technical indicators cannot. For this reason, it is necessary to understand what is behind the indicator and what it really gives us the positive side at the moment.
Lower willingness to buy
According to Criptonoticias, in a chart published by analytics firm Chainalysis, Bitcoin trading strength saw its lowest record in the last year on Monday, June 28, after the indicator had reached its highest value so far this year the day before.
The indicator is included in the Chainalysis Market Intelligence report, which compares the value of the trading order book with bitcoin inflows to exchanges. According to Chainalysis, the ratio was at 14,383 as of Sunday, June 27, the highest level of the year, but dropped to 5,745 on Monday of this week.
The dramatic change in this indicator can be explained by a sharp change in the percentage of market participants who want to buy bitcoin compared to those who are willing to sell. According to Chainalysis, while there would have been more participants willing to buy than willing to sell last Sunday, this situation would have been completely reversed on Monday.
However, from a personal perspective, this indicator may reflect the fact that we may be in a transitional period where many investors tend to gain at lower prices. If you look closely, June is a month of extreme accumulation following a price decline.
In its last report, Coinmetrics showed a very interesting fact that fundamentalist indicators support the start of a true bull cycle. In line with our main analysis and our personal opinion. This is just the beginning.
Coinmetrics says that the supply of bitcoin is decreasing by 50% every four years. So far, there have been three such halves, most recently on May 11, 2020. Each halving has effectively heralded the start of a new cycle, with the 2013 cycle peaking 370 days after the first halving and 524 days after the second halving in 2017. The third halving is 413 days past.
In addition, historically, MVRV has been below 1 between each cycle. the 2013 cycle had a double peak with an initial peak of $230 on April 9, 2013 and a second peak of $1,134 on December 4, 2013.
Between the two peaks, the price dropped to $66 at one point. However, after the first peak in 2013, the MVRV dropped below 2, but never reached 1.0. After the second peak in 2013, the MVRV dropped below 1 for the first time on September 28, 2014.
Bitcoin reached a peak of $19,640 on December 16, 2017. After 2017, the index fell below 1 for the first time on June 13, 2018.
After this, and after the last halving, we saw many people with a willingness to buy to maintain long-term accumulation and retention. No one wants to lose a new bull cycle or move away from the gold mine, but as seen, we are only in the second wave of a monthly correction. A simple bullish start to what many see as the end of the cryptocurrency market.
Chainalysis compared three groups. Those Bitcoins that have been moved within the last two weeks, those BTC held between 2 and 52 weeks, and finally BTC that have not moved in over a year.
The chart below shows that the dominant group of bitcoins, 9.37 million, have not moved in over a year, while the group of bitcoins held for more than two weeks and less than a year is 9 million bitcoins. Only 330,000 bitcoins have been retained for less than 2 weeks.
The percentage change in these groups can be interpreted as favoring a price rally, as the group of bitcoins held for less than 2 weeks has fallen 71% in the last 180 days, while the intermediate group has risen 21% in the same period. Meanwhile, older bitcoins have seen declines over the past three months, albeit by just 6%, according to Chainalysis.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/indicators-show-we-are-at-the-beginning-of-a-bull-cycle/
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