Despite a recent pullback from its 2023 peak of $44,000, Bitcoin is gearing up for another potential price surge, as highlighted in a recent report by CryptoQuant's Tarekonchain analyst.
Bitcoin is gearing up for another potential price surge, despite a recent dip from its 2023 peak of $44,000, as highlighted in a recent report by CryptoQuant's Tarekonchain analyst. The analyst assessed three key on-chain indicators, noting their recent upward trends. The bearish sentiment in the Bitcoin market has subsided, making way for the initial phase of a bullish cycle.
The first metric examined is Bitcoin's Net Unrealized Profit/Loss (NUPL). NUPL gauges whether Bitcoin holders are currently facing unrealized gains or losses. It compares the average purchase price of all Bitcoin investors with the current market price. When NUPL rises above 0 and maintains an upward trend, it signifies that BTC holders are in profit. According to Tarekonchain, an increasing NUPL indicates a progressively profitable market, often correlated with optimistic sentiment. At 0.48 and in an upward trend, the analyst notes, "The current trajectory of NUPL indicates an increasing market optimism, a typical leading indicator of a growing market."
Another metric evaluated by CryptoQuant's analyst is the Market Value to Realized Value (MVRV) ratio. A positive MVRV above 1 signals that Bitcoin is overpriced, while a negative MVRV indicates undervaluation. Based on a 30-day moving average, BTC's MVRV has increased by 11% over the past month. According to Tarekonchain, "The recent upward movement of the MVRV ratio from these lower levels may signal that the market is transitioning from a low valuation state to a phase where growth is anticipated, hinting at the beginning of a bullish cycle."
Finally, the analyst examined BTC's Puell Multiple, offering insights into the profitability of mining activities on the BTC network. As the value of this metric rises, mining revenue is relatively high compared to the long-term average. Conversely, a low Puell Multiple indicates relatively low mining revenue compared to historical averages. Drawing insights from BTC's historical performance, Tarekonchain notes that a low Puell Multiple often marks the market bottom, viewed by many as an opportunity to accumulate Bitcoin.
With this indicator trending upward recently, the analyst concludes, "The gradual increase of this multiple from lower levels can be understood as reducing selling pressure and increasing profitability for miners, aligning with the potential onset of a bullish cycle."
