On-Chain Metrics Flashing Crypto Market Bottom Signals, but the Macro Environment Is Still Wobbly: IntoTheBlock

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Market intelligence platform IntoTheBlock says that even though on-chain data is hinting at a bear market bottom for crypto assets, the overall macro environment is still shaky.

In a new article, the crypto analytics firm finds that the number of long-term Bitcoin (BTC) holders, or traders who have owned BTC for at least a year, burgeoned in 2022, noting the investor class is known for purchasing the king crypto during bear markets and creating a support level.

“HODLers supporting a bottom – long-term Bitcoin holders historically take advantage of bear markets to buy Bitcoin.

In 2022 we saw the amount of Bitcoin owned by addresses holding for over one year (‘hodlers’) increase by 50% from 10 million BTC to 15 million BTC. This pattern has been observed in previous bear markets, with hodlers’ balance decreasing only after new highs are set.”

The article also finds that half of Bitcoin holders are currently underwater, which was the case the last few times Bitcoin found its bear market bottom.

“Previous bear markets have bottomed after getting to the point where 50% or more of the holders are losing money on their positions, classified as ‘out of the money’ by IntoTheBlock.”

According to IntoTheBlock, stocks and cryptocurrencies, particularly BTC, have begun correlating again after the collapse of prominent crypto exchange FTX caused their paths to branch off.

However, the firm notes that though current conditions resemble bear market conditions of the past, it’s hard to pinpoint what is on the horizon for Bitcoin.

“Macro correlations are back – after diverging in paths throughout the FTX collapse, crypto and stocks have been moving in tandem again. The correlation coefficient between the Nasdaq and Bitcoin is back up to 0.86 currently, suggesting a very strong statistical relationship between the two…

On-chain metrics from previous bear markets follow previous bottoming patterns, but the increasing relevance of these macro factors still cast uncertainty on whether the recent price action marks the beginning of a bull market or just a bull trap.”

Bitcoin is changing hands for $22,624 at time of writing, a nearly 7% gain during the last 24 hours.

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