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What stage has the bull market reached? Full analysis of indicators on the Bitcoin chain



The indicators on the Bitcoin chain can be used to judge the market cycle of the cryptocurrency. This article analyzes the current market stage from the three indicators of MVRV, SOPR and HODL Waves.


MVRV is one of the on-chain indicators used to judge Bitcoin price tops and bottoms. MVRV refers to the ratio of free float market capitalization to realized market capitalization. Free float market cap refers to the circulating supply, while realized market cap can be thought of as an approximate estimate of Bitcoin's total cost basis.

Historically, a high MVRV value indicates that the Bitcoin price is near a phase top, while a low value indicates that it is approaching a phase bottom. When the MVRV value falls below 1, it is the best time to buy Bitcoin. An increase in the MVRV value indicates that current sentiment is rising rapidly (increasing risk) relative to the estimated total cost base, while a decrease in the MVRV value indicates the opposite.

CryptoQuant CEO: If purchasing power continues to come from stablecoins, it will be bad for the bull market: CryptoQuant CEO Ki Young Ju tweeted that if purchasing power continues to come from stablecoins, it will be bad for the bull market. If so, then once the exchange’s stablecoin reserves are depleted, it’s all over. [2021/3/15 18:44:13]

On January 8, 2021, Bitcoin broke through $40,000 for the first time, and the MVRV value rose to 2.96. The price of Bitcoin then began to decline and fell below $34,000 on January 12. This is similar to the sharp retracement after the MVRV peaked at 3.05 in June 2017.

On February 21 this year, Bitcoin touched $57,500, while MVRV reached 3.09, which was the first time it broke through 3.0 in December 2017. This marked the start of yet another major retracement, which saw Bitcoin drop below $47,000 on Feb. 28. It can be seen that MVRV hitting 3.0 often indicates the risk of a pullback in the current market cycle, as shown in the red area of ​​the chart above.

ETH-BTC correlation falls below 50% for the first time since January 2018, or a bull market is coming: Crypto analysis platform Skew tweeted that the ETH-BTC correlation has fallen below 50% for the first time since January 2018. The falling correlation suggests that we may soon be headed for a bull market. The first time the ETH-BTC correlation previously dropped below 0.5 was prior to the 2017 bull run. (Coin Gape)[2020/11/25 22:07:13]

On March 13, Bitcoin briefly broke through $61,000, MVRV rose to 2.96 again, and the price also retreated again. As of March 31, MVRV has dropped to 2.65, which is still far from the highest level (4-6) of the previous two bull market surges.


SOPR (Spend Output Profit Ratio) is another indicator of Bitcoin market cycles. Introduced by Renato Shirakashi in 2019, SOPR measures whether holders are selling at a profit or at a loss.

Voice | Liu Changyong: Now is the adjustment period between the bear market and the bull market: Yang Haipo, CEO of ViaBTC mining pool, previously posted on Weibo, "In fact, it is still a bear market. The concentration of exchanges is the result of the stock game. A real bull market must be driven by increments.” ​​​​Liu Changyong, founder of Zhimi University, commented that I think it is an adjustment period between a bear market and a bull market. [2019/8/7]

SOPR is the ratio of the Bitcoin price when the UTXO (unspent output) was spent to the Bitcoin price when the UTXO was created. In other words, it represents the selling price divided by the buying price. Every time a transaction occurs, we can compare the price of bitcoins when the UTXO was created with the price it was spent to estimate whether the bitcoins in the UTXO were sold at a profit or at a loss.

Voice | Encryption Analyst: Later this year may enter the beginning of the next bull market: According to bitcoinexchangeguide, according to the latest analysis of encryption analyst and trader Magic Poop Cannon, Bitcoin is preparing for a possible pullback. A Golden Cross appears to be establishing between the 200EMA and the 50EMA. If a golden cross does establish in the next few weeks, it will be a huge sign that the bear market is over and will be in the transition phase into the next bull market, which will start later this year. In the short-term, Cannon believes that we are about to see Bitcoin return to the $4,000 region, with the possibility of reaching $4,300, which is close to the bottom of the ascending channel. He is sure that Bitcoin will pull back after making contact with the top of the ascending channel. [2019/4/16]

We can calculate SOPR for a single UTXO, but we can also calculate SOPR for a group of UTXOs. The graph above is the combined SOPR ratio of all UTXOs used in daily totals. The indicator can also be smoothed with a 7-day rolling average since SOPR is relatively volatile.

Historically, a high SOPR value has indicated that the Bitcoin price has reached a phase top. Conversely, a low SOPR number indicates that holders are selling at a loss, suggesting a buying opportunity. When the SOPR value is 1, it represents the critical point from selling at a profit to selling at a loss.

On January 8 this year, as the price of Bitcoin broke through $40,000, SOPR reached 1.048, the highest level since December 2017. Subsequently, the price of Bitcoin began to fall, and SOPR fell to 1.004 on January 26, and the price also retraced to $32,600. At present, SOPR has rebounded to about 1.015, similar to the level when Bitcoin was at $5,000 in 2017 (later rushed to $20,000).

HODL Waves

Bitcoin's holding time distribution (also known as "HODL Waves") shows how long Bitcoin has remained stationary since its most recent on-chain move. Introduced by Unchained Capital in 2018, the data provides a macro perspective on how Bitcoin supply has changed over the years. Changes in the supply of Bitcoin can be used as an indicator of market cycles.

Looking up from the bottom of the chart, the red area indicates short-term relatively active-zce supply. Historically, short-term supply moves peak at market cycle tops. For example, in December 2017, the price of Bitcoin was close to 20,000 US dollars, and the proportion of Bitcoin held within 90 days was as high as 32%. By August 2018, that had dropped to about 15%.

Looking down from the top of the chart, purple (10+ years) to pale yellow (1-2 years) show chips that haven't moved over longer periods of time. As the price reaches cycle lows, the proportion of this portion of the distribution tends to expand; as long-term holders begin to sell, this portion of the proportion begins to shrink, and cycle highs appear. The purple band at the top represents chips that have never moved on-chain since Bitcoin was issued, representing about 12% of the total supply.

During the bull markets of 2013 and 2017, the percentage of short held supply (holding <180 days) reached ~50%, coinciding with market highs. Periods of long held supply above 60% are generally good times to buy.

On January 8 this year, the activity of short-term supply reached its peak, and the active-zce chips that had been held for 7 days accounted for 5% of the supply, and there was a profit-taking sell-off. However, as of March 31, the proportion of active-zce chips held within 180 days accounted for 36%, which is still far below the peak (50%) in January 2018.

In summary, the Bitcoin bull market has entered the second half, but there is still a long way to go before it peaks.


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