Is Bitcoin Bull Run Coming Soon? What Network Fundamentals Say

Keshav Verma

1 year ago

3 mins read

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Here’s what the Bitcoin network fundamentals have to say regarding whether the cryptocurrency could see a bull run soon or not.

Monthly Average Bitcoin New Addresses Have Shot Up Recently

In a new post on X, analyst Ali discussed the possibility of a bull run starting soon for the cryptocurrency. According to the analyst, “a bull run is often characterized by increased on-chain activity.”

To measure the activity, Ali has used the “new addresses” metric, which keeps track of the total number of new addresses coming online on the Bitcoin blockchain every day.

When the value of this metric is high, it means that many users have joined the network during the past day. This could suggest that the cryptocurrency is observing high adoption right now.

On the other hand, low values imply not many newcomers are currently attracted to the blockchain, potentially a sign of a lack of interest in the market around the coin.

Now, here is a chart that shows the trend in the Bitcoin new addresses, as well as the 30-day and 365-day simple moving averages (SMAs) of the indicator over the past few years:

The data for the daily new addresses on the network since January 2018 | Source: @ali_charts on X

The increased activity, which may be associated with a bull run, can be “spotted when the monthly average of new wallets (red) surpasses the yearly average (blue), which indicates strengthened network fundamentals and increased use,” as explained by the analyst.

The graph shows that the 30-day SMA of the Bitcoin new addresses had been under the 365-day SMA during the bear market, but with the rally this year, the former had managed to break above the latter.

The reverse cross had happened during the slowdown in May-June, but as the subsequent rebound in the price had occurred, the monthly average new addresses had broken back above the yearly average, and it has since stayed there.

Recently, despite the struggle in the price, the 30-day SMA of the metric has only continued to rise sharply. This could naturally be a constructive sign for the asset, and going by historical precedence, it may even mean a return toward bullish momentum.

The lead on-chain analyst at Glassnode, @_Checkmatey_, however, has replied to Ali’s post, saying, “with the advent of ordinals, it is always a great idea to pair ‘addresses,’ and ‘transactions’ metrics with ‘volume’ metrics.”

“Ordinals” here refer to inscribing data directly into the Bitcoin blockchain. They are utilized in various applications, including making non-fungible tokens (NFTs) on the network.

Such chain applications can skew the address-related metrics, as new ones may be created solely for using the blockchain in this way and not for actually trading the coin itself.

The Glassnode lead explains that they assign a slightly higher weight towards the volume metrics because the Ordinals-related transactions don’t involve much volume.

The exchange volume over the last few years | Source: @_Checkmatey_ on X

Unlike the new addresses metric, the bullish pattern isn’t yet forming for the exchange volume (which includes both inflows and outflows). This would suggest that the activity on the network may not be at a bull run stage right now.

BTC Price

At the time of writing, Bitcoin is trading at around $27,000, up 3% over the past week.

BTC has stagnated around the $27,000 mark | Source: BTCUSD on TradingView

Featured image from iStock.com, charts from TradingView.com, Glassnode.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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