Glassnode: Banking crisis pushed Bitcoin out of bear market

Bitcoin posted an impressive weekly gain of 35.8% thanks to emergency measures by leading central banks after a loss of confidence in banks. A structure reminiscent of early bull markets in digital gold has formed, Glassnode emphasised.

#Bitcoin has out-performed this week, rallying 35.8% against a backdrop of challenging conditions for the traditional financial system.

This week, we explore how #Bitcoin appears to be shifting up a gear, and rallying out of deep bear market territory.https://t.co/Xs5mtaAhqB

— glassnode (@glassnode) March 20, 2023

Since 2015 there have been only 16 days on which Bitcoin’s weekly growth rate exceeded the result achieved in the previous week, according to researchers.

Against the backdrop of stress in the traditional financial system and the liquidity injections that followed from central banks, on-chain indicators moved out of deep bear market territory.

The daily transaction count (monthly average) rose to 309,500 — the highest since April 2021, well above the annual average.

Using clustering algorithms, analysts assessed the daily created unique addresses. Last week the figure reached 122 000. In their estimates, only in 10.2% of days since the formation of genesis block was it higher — predominantly at the peaks of 2017 and during the 2020-2021 bull market.

Rising network load led to higher on-chain fees, linked to renewed waves of Bitcoin adoption as demand for block space grew.

Daily miner revenue rose to $22.6 million — the highest since June 2022, beating the annual average. Such activity patterns in the past have typically accompanied a transition to a more constructive market, the experts noted.

The indicator MVRV reached 1.36. It moved toward the network-wide historical average value (1.82), rebounding from the oversold zone one standard deviation (δ) below.

Historically within bands of +/- δ from the mean, Bitcoin traded 54% of all trading days, according to analysts. The current price above $27 000 corresponds to -0.5δ. In other words, the market price no longer reflects a pronounced discount relative to the historical mean, they noted.

MVRV Momentum has moved into positive territory, indicating that a substantial portion of coins has been purchased below the current price. As with the metrics above, such shifts in the past have generally correlated with higher on-chain activity.

The indicator SOPR is also forming a structure reminiscent of the 2018-2019 recovery period.

Last week, all variants of the metric tested the boundary at 1 from above to below. This points to broad realised losses during the sell-off as the price fell to $19,800, analysts explained. After that, aSOPR reached its highest level since November 2021.

It seems that few hodlers who endured the heightened volatility are inclined to realise profits on this rally. This reflects beliefs about Bitcoin’s important role in the future global financial system, the analysts concluded.

Earlier, in March, CryptoQuant founder Ki Young Ju and analyst rektcapital noted that digital gold had moved into a bull phase.

Earlier, Messari founder and CEO Ryan Selkis predicted Bitcoin would rise to $100,000 within 12 months.