The hangover from a bull market of excess, leverage, and insanity will take a while. Today we look at the early signs of a market recovery, however we remain far from the promise land of a proper sustained move higher.
Confluence in market analysis is your best friend. It helps you stack the probabilities in your favour. What it also does is reduce reliance on any one metric, concept or piece of market structure.
In on-chain analysis, many folks who a new tend to look at 15 different metrics, without realising that PRICE is the numerator in all their ratios. As a result, their analysis is basically a direct derivative of PRICE, which means there often isn’t as much edge as they think.
The models we look at today sit across four completely different topics, in Bitcoin market fundamentals:
1) 🟢 Spot Prices trading above key Pricing Models (both technical and on-chain)
2) 🟡 Increasing momentum in network utilization (higher on-chain activity, increased network congestion, more fee revenue)
3) 🔵 Market Profitability Returning (indicating seller exhaustion, profits are being taken and market is absorbing sell-side)
4) 🔴 Balance of USD Wealth is in favour of longer-term HODLers (indicating that a high conviction holders are the dominant owners of the coin supply)
Within each category are two separate models that consider at meaningfully different components of Bitcoin.
Whilst we don’t yet have a sustained pickup across many of these metrics, we have some signs of life. Not there yet, but on the right path.