Research: On-chain metrics continue signaling a Bitcoin bottom

Jan. 19, 2023 at 5:49 pm

By Samuel Wan and James Van Straten

On-chain Bitcoin metrics continue to suggest a market bottom, but it remains to be seen if the current cycle plays out the same as past cycles.

Previous on-chain research suggested the Bitcoin market bottom was in. CryptoSlate revisited several Glassnode metrics, which continue to indicate a bottoming of price.

However, macro factors, which may not have been present in previous cycles, remain in play, potentially impacting the current cycle.

Bitcoin Supply P/L Bands

Bitcoin Supply P/L Bands show the circulating supply that is either in profit or loss, based on the price of the token being higher or lower than the current price at the time of last moving.

Market cycle bottoms coincide with the Supply in Profit (SP) and Supply in Loss (SL) lines converging, which happened most recently around Q4 2022. The subsequent act of the lines diverging has corresponded with price reversals in the past.

Currently, the SP band has moved up sharply to diverge from the SL band, suggesting a macro upturn in price could be on the cards if the pattern holds.

Market Value to Realized Value

Market Value to Realized Value (MVRV) refers to the ratio between the market cap (or market value) and realized cap (or the value stored). By collating this information, MVRV indicates when the Bitcoin price is trading above or below “fair value.”

MVRV is further split by long-term and short-term holders, with Long-Term Holder MVRV (LTH-MVRV) referring to unspent transaction outputs with a lifespan of at least 155 days and Short-Term Holder MVRV (STH-MVRV) equating to unspent transaction lifespans of 154 days and below.

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