Bitcoin On-Chain Metrics Are Bullish, Bitfinex Report Highlights

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On-chain indicators are pointing toward positive sentiment for bitcoin, the world’s largest cryptocurrency by market capitalization.

The bitcoin supply “in profit,” According to Glassnode data, this indicator measures the percentage of coins that have a lower price than their current price. It has been increasing since the beginning of the year. Since January, the indicator has increased by more than 20%.

“This implies that larger and longer-term investors currently hold profitable on-paper spot positions,” Bitfinex analysts wrote in a report. “This trend is healthy for the latter half of a bear market as a sustained 30-day uptrend after an extensive downtrend on this indicator has historically provided a good buy signal for the following two years,” the report added.

Although bitcoin and other crypto assets have traded below their all-time highs in November 2021 (which was the highest level of trading), the crypto market has seen a positive upward trend for the past three months, with bitcoin up 50% over the previous three months.

The conviction rate for “HODLer” is high according to on-chain data. (HODLers are long-term holders. Reserve Risk Bitcoin recently fell to its lowest ever level.

According to Bitfinex, Reserve Risk is a cyclical oscillator which models the ratio between current price and conviction of long-term investor. The indicator trades at lower levels when there is a lot more investor accumulation. HODLing, on the other hand, is the preferred market strategy.

“The current price is the incentive to sell and the conviction in the ratio is a series of sub-metrics that factor in the opportunity cost of not selling. Lower the ratio, higher the conviction that investors have,” the report said.