The Bitcoin price has been a joy to watch over the past few weeks, bouncing back strongly from its $74,000 low to recover above the $100,000 level again. Interestingly, the latest on-chain data suggests that the premier cryptocurrency could be preparing to reclaim its current all-time-high price and perhaps embark on a fresh bull run.
Bitcoin Price To Follow Gold’s Footsteps
In a Quicktake post on the CryptoQuant platform, on-chain analyst Ibrahim Cosar put forward a data-focused insight into the potential trajectory of the Bitcoin price over the next few months. The relevant metric here is the Growth Rate Difference (Market Cap vs. Realized Cap), which looks at the difference in the growth rate between an asset’s market capitalization and realized capitalization.
According to Cosar, the Growth Rate Difference metric helps evaluate investor behavior (whether the market is overly pessimistic or optimistic) and the different market cycles. The indicator also helps to identify the correlation between actual value growth and price growth, while assessing the sustainability of a price trend.
Source: CryptoQuant
As seen in the chart above, the positive area (denoted by the green color) typically signals bullish market conditions. It suggests that the market cap is growing faster than the realized cap, with more investors entering the market and taking new positions.
The negative (red) zone correlates with bearish market conditions and major price corrections, as more investors offload their assets. With prices dropping and increased loss realization, investor confidence in the market begins to decline.
The highlighted chart shows that the Bitcoin price just witnessed a shift from red (bear market) to green (bull market) in recent days. Cosar believes that this change implies a potential parabolic rise in the price of BTC — as seen in the gold price over the past few months.
Bull Cycle Might Still Be On: CryptoQuant CEO
Two months ago, CryptoQuant Founder Ki Young Ju postulated that the price of BTC had reached its peak and that the bull cycle was over. However, following the impressive performance of the Bitcoin price in recent weeks, the on-chain analytics expert has walked back on their declaration.
According to Ju, the Bitcoin market has become relatively more diverse and seems to be moving away from the traditional cycle theory. The crypto CEO alluded to the past cycles being controlled by the old whales, miners, and new retail investors, while exchange-traded funds (ETFs) issuers, Strategy (MSTR), and institutional investors are the main players in the current one.
Ju, however, mentioned that the Bitcoin market is still sluggish while absorbing new liquidity, even though the most recent price action is extremely bullish. Hence, the crypto founder hinted at waiting for a clearer signal before taking new market positions.
As of this writing, the flagship cryptocurrency is valued at just above $103,000, reflecting no significant movement in the past 24 hours.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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