Glassnode Report: Why BTC Still Has the Potential to Grow 10 Times?

BTC started and ended the past week above $19,000, failing to surpass its recent ATH. But despite spending the past few weeks mostly sideways, on-chain signals remain bullish in the long term.

Bitcoin Market Health

After starting the 50th week at $19,360, the price of BTC began to gradually decline, reaching a weekly low of $17,640 on Friday. However, the price soon began to rebound after that, returning to above $19,000 at the end of the week, and finally closing at $19,180.

Bull Market

Bitcoin’s long-term holder MVRV ratio (LTH-MVRV) is currently showing an extremely bullish signal. MVRV is the ratio of market value to realized value, indicating when Bitcoin is trading above or below “fair value”;

LTH-MVRV is a variation of this indicator that is calculated for coins with at least 155 days of history.

When LTH-MVRV reaches the red zone (above 20), it usually indicates a global top. But from the figure below we can see that Bitcoin’s LTH-MVRV is still far from the red zone.

In fact, the last time LTH-MVRV was this low during a bull run, Bitcoin’s price barely topped $1,000 and still experienced a 1,432% gain before topping out. If Bitcoin follows the same trend again, this would translate into a market top of over $270,000 for this bull run.

Bear Market

While on-chain signals are overwhelmingly bullish, Bitcoin’s entity-adjusted SOPR suggests there could be some short-term bearish sentiment. The SOPR shows how profitable or losing money Bitcoin holders are; values ​​above 1 indicate that sales are, on average, profitable, and values ​​below 1 indicate that sales are losing money.

Bitcoin’s entity-adjusted SOPR remains above 1 but has been declining since late November, suggesting that the amount of profits being realized is decreasing despite prices remaining relatively stable during this time.

Falling SOPR often indicates micro bearish sentiment as sellers take profits. However, historically, this has been more of a shakeout than a trend reversal. In fact, when SOPR falls during a bull market, this usually corresponds to sideways price movement; then, when it approaches or falls below 1, this always leads to an upward price correction.

Therefore, while a decline in SOPR may suggest bearish sentiment, it is actually a sign that an uptrend is approaching. Investors should closely monitor declines in SOPR to identify a potential local bottom before the next bull run.

Willy Woo's bullish comment

Woo's Take: While the odds of an imminent pullback appear strong, the larger context is one of continued buy-side demand.

While SOPR suggests that profit taking is now underway, assets are leaving exchanges in large numbers, which suggests that spot buyer demand is continuing. This buying pressure will ease, and so will large downside moves.

In other words, a big pullback target like the $14,000 or even $15,500 I see is unlikely and would require some bearish changes in the on-chain structure that simply haven’t formed yet. Looking at the medium-term environment (next 3 months), we are in a solidly bullish environment.

Altcoin Features: Stablecoin Lock-up Increases — But So Does Its Purchasing Power

After the UNI mining ended, the supply of stablecoins locked in smart contracts has started to increase again in the past few weeks. This new upward trend can be seen on USDC, USDT, and DAI.

As more stablecoins are locked up — often for yield farming purposes — the supply available to be transferred to non-stablecoins (such as BTC and ETH) decreases, which results in a reduction in the “purchasing power” available for those assets. However, this effect is offset by the continued large increase in stablecoin supply, which ultimately exceeds the increase in locked stablecoins.

Using USDC as an example (although this is true for all major stablecoins), we can see that the growth in total circulating supply has outpaced the growth in supply locked in smart contracts, meaning that the freely available stablecoin supply is still increasing despite more stablecoins being locked up.

This suggests that not only is there growth in the DeFi space (incentivizing the locking of stablecoins), but the number of liquid stablecoins is still growing further. In other words, the supply of stablecoins available to buy volatile assets like BTC and ETH continues to increase, even as DeFi accounts for a larger portion of the total supply.

We are very bullish on this trend as it means growth (and continued growth potential) in both traditional crypto trading and novel forms of crypto yield generation.

Weekly Feature: Why 10x Bitcoin is Possible

Last week, our CTO, Rafael Schultz-Kraft, published a thread on Twitter outlining why he is “insanely bullish” on Bitcoin. Looking at some core on-chain metrics, he explained why “we could see over 10x Bitcoin from here.”

Please note that this does not represent an official position of Glassnode, nor is it financial advice - but it is a persuasive analysis.

This line covers important on-chain metrics such as MVRV, NUPL, and reserve risk, and points out that their values ​​are far lower than the points reached at previous market tops. This shows that BTC has a lot of room to grow before it becomes overvalued, supporting the argument that the current bull run is still in its early stages.

By Liesl Eichholz

Translator: Translation

Source: Crypto Valley Live

Source link: https://mp.weixin.qq.com/s/vrOgR-ehaKGW_Th6AeF9Rw