Insights from on-chain data and the derivatives market indicate that BTC’s potential to jump remains intact.
- Low UTXO Age Bands and dominant short liquidations suggest that the price can hike Old hands have reverted to accumulating too
Bitcoin [BTC] has not hit the top of this cycle, according to signals from the Realized Cap. For context, the Realized Cap tracks the value of each UTXO based on the price at which it was last moved, compared to the current value of the coin.
UTXO stands for Unspent Transaction Output and represents the amount of Bitcoin left after a transaction. AMBCrypto’s analysis of CryptoQuant’s data revealed that the UTXO Age Bands, at press time, were not close to the zenith that was hit during the 2021 bull market.
This metric measures active individual purchases in the market. When this metric is extremely high, it implies that a lot of money is flowing into Bitcoin. It also indicates that the end of the bull cycle could be close.
Source: CryptoQuant
Is another 80% hike possible?
However, that has not been the case as the percentage remains much lower than its previous peak. Owing to this data, one can assume that BTC’s price will climb past its $73,750-high from March.
Crypto Dan, an analyst and author on CryptoQuant, also shared a similar view. According to him, Bitcoin has only achieved 20% of this bull cycle. He noted,
“The current short-term money inflow situation is significantly smaller than the peak of the past bull cycle.”
However, that was not the only sign that BTC might rise higher this cycle. Checkmate, a pseudonymous on-chain analyst, also weighed in on the matter.
However, this time, the analyst focused on what’s happening in the derivatives market. From the data the analyst shared, the 2021 peak was marred by a surge in long liquidations. In his newsletter, he said,
“Last time, this was actually a signal the market had topped out.”
For the uninitiated, liquidations occur when a trader’s position is closed due to an insufficient margin balance to keep it open. It also happens if a trader uses high leverage and the target hits stop loss.
Source: Coinglass
HODLing is the way to go
High long liquidations imply that most positions wiped out are those betting on a price hike. However, this year, most liquidations have been short, reinforcing Bitcoin’s potential to hit a new all-time high.
Additionally, AMBCrypto looked at the Coin Days Destroyed (CDD). This metric shows if HODLers are actively spending their coins or accumulating more.
A high CDD indicates a surge in spent coins and could lead to a price decrease. Based on our analysis, we found that a hike in the metric happened on 24 March, following which Bitcoin’s price tumbled.
Source: Glassnode
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At the time of writing, the CDD had returned to the baseline it occupied in 202o, before the explosive run of 2021. Since HODLing continues to be the preferred option of investors, Bitcoin might still produce a monster rally before this cycle hits its peak.
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