Bitcoin and crypto markets are a full year into bear territory, and it has been about that time when the cycle bottom occurs.
During the previous bear market, it came in December 2018, a year after the Bitcoin price peak. This time around, BTC has fallen 75% from its peak a year ago, and bottom signals are mounting up.
On Dec. 6, Capriole Fund founder Charles Edwards took a deep dive into the on-chain data. He discovered that there were several signals suggesting it could be the best time to buy Bitcoin.
Bitcoin Bottom Signal Series.
A thread of on-chain signals which suggest the Bitcoin bottom is in, or very close. In my opinion, these are the most important on-chain metrics today. Based on Bitcoin’s 13 year history, they are telling me this is an extraordinary opportunity. pic.twitter.com/5io6WD2ELo
— Charles Edwards (@caprioleio) December 6, 2022
Bitcoin at The Bottom
Bitcoin adoption is at an all-time high despite the FTX crypto contagion and market crash. It is currently the highest growth rate in addresses, with more than 0.1 BTC in history. The addresses holding BTC for more than a year also represent more of the network than ever before.
Furthermore, there have only been four other times in network history that Bitcoin production cost has been below its electrical cost. These instances also coincided with market bottoms.
Edwards observed that BTC price is also trading at a 55% discount to Bitcoin Energy Value. The BEV is the asset’s fair value priced using pure watts of energy in the network. It is currently the largest discount since prices hit $4,000 in March 2020 and $160 on in January 2015.
Miner selling pressure is also at its third highest level. It only previously exceeded current levels when priced at $2 and $290. Hash ribbons have also confirmed this miner capitulation phase, as reported by CryptoPotato.
The Dynamic Range NVT or the Bitcoin PE Ratio is also flashing green which means the network is priced cheap versus the transaction value flowing through on-chain.
Additionally, Dormancy Flow has also been at all-time lows for the past month or so. According to the indicator creator, whenever dormancy value overtakes market capitalization at the lowest longitudinal levels, the market can be considered in full capitulation.
Middle of Halving Cycle
Edwards said that it was not just the data that is screaming Bitcoin is cheap, concluding:
“We are also situated smack-bang in the bottom zone for every prior Bitcoin halving cycle. This is where sentiment has always bottomed and the best long-term investments were made.”
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