According to an analyst, despite the recent consolidation of crypto markets for the past three months, there are five on-chain indicators that suggest the bull market may just be beginning. These indicators were highlighted by analyst “ELI5 of TLDR” in a post on X on May 19.
Firstly, Bitcoin market dominance is above 56%, which historically indicates the start of a crypto bull market. When Bitcoin dominance drops and altseason begins, it signals the next stage of the bull cycle, but this hasn’t happened yet.
Secondly, the Bitcoin MVRV Z score, which compares the asset’s current market value to its historical average value, is currently below 6. During cycle peaks, this score usually tops at around 6, but it hasn’t been above that since March 2021.
The Puell Multiple, another metric that aligns with cycle peaks, hasn’t reached over 3 yet. This indicator is calculated by dividing the daily value of Bitcoin mined by the yearly moving average of that value. Peaks of over 3 usually coincide with cycle tops.
HODL Waves, which show how much BTC is held by different cohorts, also look bullish for Bitcoin. A falloff in peaks in younger bands suggests that selling pressure has been exhausted and there could be room for more gains.
Lastly, the miner revenue per hash metric, which shows how much money miners make for their proof-of-work, has spiked in previous market cycle peaks. While it will trend down over time, the recent spikes suggest a potential bull market continuation.
However, there are a couple of on-chain metrics that suggest the possibility of markets overheating and reaching a top. The RHODL ratio, which compares the average price of recently bought coins to the average price of coins bought 1-2 years ago, indicates that new buyers are paying much more for BTC than long-term holders, potentially signaling a market peak. Additionally, the Cumulative Value-Days Destroyed (CVDD) metric, which tracks the movement of coins from old hands to new hands, also appears to have peaked, suggesting a potential market peak.
At the time of writing, BTC was trading at $66,668, down 10% from its mid-March all-time high.