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Cryptocurrency Market Analysis: Are We in the Early Stages of a Bull Market?

The cryptocurrency market has shown signs of recovery, with Bitcoin (BTC) surging by 28.5% in October. However, the big question on everyone’s mind is whether this surge is the beginning of a new bull market or a temporary period of consolidation following the market bottom.

To gain insights into the current state of the cryptocurrency market, on-chain analysis has proven to be a valuable tool. One of the most intriguing indicators is the “HODL Waves,” shedding light on the stages of the Bitcoin and cryptocurrency market cycle we are currently experiencing.

HODL Waves Indicator: Majority of BTC Remains Dormant

The HODL Waves indicator categorizes Bitcoin supply into different age bands, with each band representing the percentage of existing Bitcoins that have recently been moved within a specified time frame. Interestingly, the majority of BTC supply, approximately 89.1%, has not been moved, traded, or changed hands for over three months.

This remarkable situation is exemplified by the age bands older than three months, ranging from yellow to purple, which have reached a new all-time high (ATH). This indicates that the vast majority of Bitcoin holders are in “HODL” mode, holding onto their coins with the expectation of higher prices. Notably, despite the market’s recovery, most investors remain cautious due to the anticipated approval of a Bitcoin ETF and the upcoming Bitcoin halving.

Realized Cap HODL Waves: Transition from Accumulation to Bull Market

Another way to analyze the HODL Waves is through the Realized Cap HODL Waves, which divides the HODL Waves by the realized price. This chart provides insights into the transition from a bear market to a bull market and the end of long-term accumulation.

A particularly interesting cohort of age bands to watch is the light green band, representing coins that have remained unmoved for 2-3 years. These investors were late to enter the previous bull market, didn’t take profits at the all-time high, and held onto their BTC throughout the bear market and accumulation.

Historically, a surge in this cohort of 2-3-year holders has been a strong indicator of the transition from the bear market to the early stages of a bull market. This surge typically follows the macro bottom of the Bitcoin price.

If the behavior of this cohort follows past patterns, it could signal the start of a mature bull market. However, if these holders begin to sell in favor of short-term holders, it could indicate the final, mature stage of the cryptocurrency bull market.

Read More: Impact of Bitcoin ETF Approval on the Cryptocurrency Market

As we move forward in 2023, the insights from the HODL Waves and Realized Cap HODL Waves indicators provide valuable clues about the current state of the cryptocurrency market and the potential trajectory of Bitcoin and other digital assets. Investors will be closely monitoring these indicators for signs of what lies ahead in the crypto market.

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