Bitcoin Could Experience a Bullish Shift Based on On-Chain Metrics: Two specific on-chain metrics indicate that Bitcoin may be on the verge of a significant bullish crossover. An expert provides insights into the expected timing of this crossover.
An Explanation of ‘Realized Price’: The ‘realized price’ is a unique metric that calculates the average acquisition price of Bitcoin based on the on-chain transaction history of each circulating coin. It assumes the last transaction price to be the purchase price, thereby deriving an average cost basis for all coins.
If Bitcoin falls below this metric, it implies that the average holder is experiencing a loss. On the other hand, a price above this indicator signifies market profits.
While the realized price for the entire Bitcoin community is not the main focus, attention is given to two specific UTXO (unspent transaction output) age bands: 6 months to 12 months and 12 months to 18 months. These bands represent the movement of coins within their respective time ranges.
Observations on Bitcoin‘s Realized Price: Historical data reveals that the realized price for UTXOs dormant between 12 and 18 months has been decreasing. However, the 6-month to 12-month band, after initially declining, has now stabilized and is moving upwards.
This shift can be attributed to the inclusion of buyers from the early-year rally into the 6-month to 12-month cohort. Previously, this group consisted mainly of buyers during the bear market, which caused the average to decrease. The 12-month to 18-month cohort still includes these bear market buyers, explaining its continued decline.
If these metrics continue on their current trajectories, a crossover is expected. Historically, a crossover where the 6-month to 12-month band surpasses the 12-month to 18-month group has indicated a bullish trend for Bitcoin.
Such crossovers are rare, with only four instances in Bitcoin‘s history. If this trend continues, it would mark the fifth occurrence. Experts predict that this bullish crossover could happen around November 28, 2023.