Key Points
- Bitcoin’s realized cap age bands indicate holders are beginning to sell, signalling the start of a bull run.
- Metrics suggest there is still a significant potential for Bitcoin’s price to increase further.
Over the past five days, Bitcoin (BTC) experienced a remarkable surge, with its price jumping from $50.9k to $64k.
This price increase has led to a shift in behavior among long-term Bitcoin holders, who are now starting to sell their assets instead of holding onto them.
The Start of a Bull Run
This pattern is not new and has been observed during previous cryptocurrency cycles.
The realized cap age bands, a metric that shows the distribution of the realized cap of a specified age band, suggest that the current bull run is only just beginning.
The realized cap is the total value of BTC in circulation if bought at the price each coin last moved at.
The chart that outlines this metric summarizes the capitalization held by short-term and long-term holders.
Similar to the bull run in the second half of 2017, the age bands of holders from 3 months to 5 years are showing a downward trend.
This trend indicates that more holders are taking profits as prices climb higher.
Signs of a Continuing Uptrend
The decline in the age bands of 3 to 6-month holders and 6 to 12-month holders since mid-January is reminiscent of the bull runs in 2017 and 2021.
Despite the recent surge in Bitcoin’s price, the 30-day simple moving average (SMA) has trended downward.
This is a deviation from the usual trend where active addresses increase alongside prices.
The MVRV ratio, another important metric, reached a value of 2.59, a level not seen since November 2021.
If this ratio reaches 3.7, it would indicate that the bull run is likely at an end.
However, at the current level, there is still ample room for the MVRV to climb higher.
Pullbacks and significant corrections along the way are seen as positive signs, as they likely represent discounts on Bitcoin.
In 2019, when the prices reached $12k, the MVRV was no higher than 2.6.
While a black swan event like the coronavirus pandemic might not repeat, it is inferred that there is still a long way to go for Bitcoin’s price discovery in this run.
