Several on-chain metrics of the Bitcoin (BTC) network are issuing buy signals after this year’s rally.
Bitcoin has snapped out of its slumber to post a 37% gain since early 2023. However, on-chain data continues to indicate it could be a “generational buying opportunity.”according to analysts.
On January 24, researcher and technical analyst “Game of Trades” identified six on-chain metrics for its 71,000 Twitter followers.
The first metric is an accumulation trend score that highlights areas of strong accumulation in terms of entity size and the number of coins purchased.
“Large entities have been in deep accumulation mode since the FTX crash,” the analyst noted, adding that “a similar accumulation took place at the 2018 and 2020 lows.”
Bitcoin: 6 on-chain metrics calling for a generational long-term buying opportunity
To thread
—Game of Trades (@GameofTrades_) January 23, 2023
Bitcoin: 6 On-Chain Metrics Heralding a Long-Term Generational Buying Opportunity: A Thread
The bitcoin entity-adjusted latency flow is a measure of the relationship between the current market capitalization and the annualized latency value.
As long as the latency value exceeds the market capitalization, the market can be considered to be in full capitulation, what has been a good historic shopping area.
According to Glassnode, this metric fell to its lowest level in 2022.
Bitcoin reserve risk can be used to measure long-term holder confidence in the BTC price. This also fell to its lowest level in history at the end of 2022.according to data from Glassnode.
The Realized Price (RP) of bitcoin is the value of all coins in circulation at the price at which they last moved; in other words, an estimate of what the entire market paid for your coins.
According to Woo Charts, bitcoin has been trading below this level since the FTX crash in November until January 13. It is currently sitting just above the RP, which represents another buying opportunity.
The Bitcoin MVRV Z-score shows when BTC is significantly overvalued or undervalued relative to its “fair value” or realized price. When the metric leaves the extreme undervaluation zone, it is often considered the end of the bear market.
Finally, there is the Multiple Pull, that examines the fundamentals of mining profitability and its impact on market cycles.
Lower values, as is the case right now, indicate mining stress and represent long-term buying opportunities.
The analyst concludes that These six on-chain metrics “point to an exceptional risk-reward setup for bitcoin.”
The metrics are all at levels similar to the market cycle lows in 2015, 2018 and 2020, he added.
At the time of publication of this article, BTC was trading down more than 1.9% in the last 24 hours to $22,675according to data from Cointelegraph.
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