As Bitcoin Sits Comfortably Atop $30K, On-Chain Metrics Suggest Further Upside For the BTC Price
Bitcoin (BTC), the most valuable cryptocurrency in the world by market capitalization that powers the world’s first cryptographically secured, decentralized payments ledger, hit its highest level since June 2022 on Thursday to the north of the $30,600 level.
BTC/USD was last changing hands up in the region of 1.6% on the day, having recovered well from an earlier dip to the south of the $30,000 mark.
The latest push higher, which was catalyzed by a bullish breakout to the north of a pennant structure late last week, has seen Bitcoin extend its on-the-year gains to more than 80%.
That makes Bitcoin one of the best-performing major assets in the world.
The April rally, which has seen BTC pop over 6.5% already this month, comes as a string of US data show 1) US economic activity is fast slowing, 2) inflation continues to drop quickly and 3) while still healthy, the US labor market may also be turning.
All of this at a time when the effects of last month’s bank crisis (which is expected to trigger a credit crunch) are yet to start being felt in the US economy.
In other words, the likelihood of a US recession is fast rising.
Rising hand in hand with this are bets that the US Federal Reserve will soon stop hiking interest rates and embark on a cutting cycle, resulting in an easing of financial conditions that has historically been a massive tailwind for the Bitcoin price.Technicals Point to More Gains Ahead
Chart analysis suggests that continued Bitcoin price upside remains a distinct likelihood.
Since breaking to the north of last month’s highs in the mid-$29,000s, the door has now been opened for BTC to hit the next major resistance area around $32,300 (the late-May/June 2022 highs).
All of BTC’s major moving averages are moving higher in consecutive order and the 21-Day Moving Average recently offered strong support, a vote of confidence in Bitcoin’s short-term momentum.
Other longer-term technical signals from the major moving averages also positive.
Bitcoin’s powerful rebound in mid-March from a retest of the 200DMA (and realized price) just under $20,000 was interpreted by many as bull market confirmation at the time, and continues to offer tailwinds.
Moreover, the golden cross enjoyed by the BTC price back in early February – historically a very bullish signal for BTC – is another longer-term technical tailwind for the price action.
Bitcoin’s 14-Day Relative Strength Index (RSI) is flirting with being in overbought territory, suggesting that the risk of short-term profit-taking is on the rise.
But this doesn't always prevent BTC from continuing on a decent run of short-term gains, with the recent price rally from mid-January to February a good example of this.On-Chain Trends Also Support the Bull Narrative
Positive on chain trends are also indicative that Bitcoin’s trading bias in the medium to long-term will remain decidedly to the upside.
Firstly, core on-chain metrics pertaining to network utilization (which thus act as a proxy of “demand” for the Bitcoin network).
Metrics such as daily active address numbers, number of addresses with a non-zero balance, number of new addresses and number of daily transactions all continue to trend higher, according to data presented by crypto analytics firm Glassnode.
Meanwhile, other on-chain metrics, such as those monitored in Glassnode’s “Recovering from a Bitcoin Bear” dashboard, are all screaming bull market.
This dashboard tracks eight indicators to ascertain whether Bitcoin is trading above key pricing models, whether or not network utilization momentum is increasing, whether market profitability is returning and whether the balance of USD-denominated Bitcoin wealth favors the long-term HODLers.
All eight indicators have now more or less been flashing green in unison since mid-March, the longest such spell in just over two years.
Historically, the moment when all of the dashboard’s indicators turn green (i.e. right now) has been a great long-term buy opportunity.How High Can Bitcoin Go This Bull Market?
If the US economy is headed towards recession and deflation and a Fed interest rate cutting cycle is coming, the macro conditions are certainly there for a continued Bitcoin bull market.
That’s not to mention a widely anticipated continuation of Bitcoin’s (and more generally, crypto’s) global adoption, which is really the main long-term bullish argument.
Assuming the Bitcoin bull market is back, how high can BTC go this cycle?
We can arrive at a guestimate by looking at Bitcoin’s past two market cycles, both of which lasted approximately four years.
From the bottom of the 2015 bear market to the top of the 2017 bull market, Bitcoin gained a staggering more than 12,500%.
From the bottom of its 2018 bear market to the top of its 2021 bull market, Bitcoin gained a still impressive 2,100%.
Assuming diminishing returns from each bear market comeback continue, could Bitcoin perhaps be looking at a 1,000% (11x) bounce from its 2022 lows?
That would imply Bitcoin reaching the $165,000 area sometime in the next few years.
Other more widely followed Bitcoin pricing models are sending a potentially more bullish story.
According to the Bitcoin Stock-to-Flow pricing model, the Bitcoin market cycle is roughly four years, which shows an estimated price level based on the number of BTC available in the market relative to the amount being mined each year.
Bitcoin’s fair price right now is around $55K and could rise above $500K in the next post-halving market cycle - that’s around 20x gains from current levels.
Finally, Blockchaincenter.net’s popular Bitcoin Rainbow Chart shows that, at current levels, Bitcoin is in the “Accumulate” zone, having recently recovered from the “Basically a Fire Sale” zone in late 2022. In other words, the model suggests that Bitcoin is gradually recovering from being highly oversold. During its last bull run, Bitcoin was able to reach the “Sell. Seriously, SELL!” zone.
If it can repeat this feat in the next post-halving market cycle within one to one and a half years after the next halving, the model suggests a possible Bitcoin price in the $200-$300K region. That’s around 7-10x gains from current levels.