2023 has the potential to be a good year for BTC. In this analysis, I look at various long-term data and indicators. Most of the charts below come from Looknode and are supplemented by data from Buy Bitcoin Worldwide.
Let’s begin with growth in new addresses. For easier interpretation, I smoothed the chart below a bit (14-day SMA).
Since the beginning of the year, we have seen an upward trend that is characterized less by individual, large spikes and more by its sustained upward momentum.
Individual strong upward swings in new BTC addresses have mostly occurred in recent years after price crashes. Constant increases like the current one, on the other hand, were accompanied by long-lasting price increases in Bitcoin.
Let’s go into more detail and take a look at the active addresses (the chart shows 14-day SMA).
It is noticeable here that the number of active Bitcoin addresses fell slightly over 2022, apart from a few fluctuations. This changed at the beginning of 2023 and we are seeing significant and sustainable growth here.
This is underscored by the growth in addresses holding more than 1 BTC.
Throughout the past bear market, many have made use of the low prices to buy more Bitcoin. Especially just before the turn of the year, the growth of these wallets was enormous and although the prices have recently risen sharply, the momentum continues.
The changed market environment is also reflected in various Bitcoin indicators.
After spending around 6 months there, the MVRV-Z score has clearly left the bottom area (green) behind. As can be seen from the chart, there is still a lot of upside potential before we reach bubble (red) territory. It also shows that this bull cycle is still in its early stages.
The positive market development is also reflected in investor sentiment.
The Fear & Greed index is currently in the ‘Greed’ area with 58 out of 100 points. Although we still have the potential for further price increases here, it looks like a sharper price correction is definitely in the cards.
Bitcoin cycle repeat chart also indicates a correction is possible.
Finally, let’s take a look at the percentage of Bitcoin investors who are currently making a profit.
Around 73% of all Bitcoin investors are currently making a profit with their investments. That sounds like a lot, but as the chart shows, the peak of a cycle is only reached at around 90%.
Let’s summarize these findings.
All on-chain macro indicators and cycle valuation metrics for Bitcoin listed in this analysis paint a positive picture.
It looks like we are clearly out of the bear market and in the early stages of the next bull cycle. Both address growth, user sentiment, and various indicators that offer orientation in the current cycle show a sustained upswing. This is fundamental — it is not an outlier, but a long-term positive trend that forms the basis of any bull cycle.
Even if the current picture is a very good one, caution should be exercised. The experience of previous cycles shows that the positive momentum can quickly rebound. In fact, the months following past bear cycles are often characterized by months of sideways momentum. As always, it is difficult to say how things will continue in the coming months and will be significantly influenced by various macro developments in the global economy and global politics.
Disclaimer: Nothing in this article is financial advice!
Read more: https://medium.com/coinmonks/update-on-btc-price-network-trends-77e8bf7e92ee
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