- The crypto market has been rife with speculation about future moves after Bitcoin’s ongoing intermittent price movements.
- According to on-chain analytics tool Glassnode, Bitcoin’s Reserve Risk indicator’s 7-day average has reached its lowest level in a month.
- Long-term holders have been gaining strength over the past two years and are currently storing nearly 75% of all circulating Bitcoins.
Bitcoin’s sluggish price and stagnant sideways movement have dampened investor expectations, but current metrics indicate an early stage of a bull market.
Is Bitcoin in the Early Stage of a Bull Run?
The crypto market has been rife with speculation about future moves after Bitcoin’s ongoing intermittent price movements. To understand the context, BTC surged to yearly highs during the June market rally, only to reach a stifling situation and begin hovering within a narrow range of $29,000 to $31,000.
Many expert analyses suggest that investors are increasingly inclined to HODL their money instead of seeking gains. According to Glassnode, Bitcoin’s Reserve Risk indicator’s 7-day average has reached its lowest level in a month. Less commonly used but reliable, the Reserve Risk is useful for measuring Bitcoin’s long-term growth potential.
A decision to buy Bitcoin was based on the confidence of current and future participants. As existing participants delay spending their funds, their belief in Bitcoin’s future outlook strengthens further.
Glassnode defines Reserve Risk as a risk/reward ratio based on the confidence of long-term holders. As prices rise, the appeal of selling and locking in gains also increases. While weak hands capitulate, experienced individuals resist this urge. Reserve Risk was the ratio of selling pressure to the strength of HODLers.
A low Reserve Risk indicates low prices and high HODLer confidence. A potential investor sees this as a positive signal to enter the market and buy Bitcoin. Therefore, the current situation suggests the possibility of a bull rally.
Historically, as shown in the graph above, drops to the green bands were followed by significant price movements. This further strengthens the perception that BTC is in the early stages of a bull market.
HODL activity in Bitcoin is strengthening
Long-term holders have been gaining strength over the past two years and are currently storing nearly 75% of all circulating Bitcoins. Consequently, the remaining supply for active traders or short-term holders has sharply declined.
BTC’s resilience during both crypto and traditional financial crises, coupled with regulatory approvals, has paved the way for future investments and growth. Consequently, investors are increasingly viewing it as a store of value.
