Will Bitcoin Repeat History? On-Chain Data Suggests a Q4 Breakout: CryptoQuant

Historical data shows bitcoin (BTC) performing well in the fourth quarters of previous bull cycles, especially in halving years. Current on-chain data indicates that the leading cryptocurrency is following previous patterns and is on track to another remarkable Q4.

A report by the market analytics platform CryptoQuant revealed that bitcoin’s price rally in the coming weeks could be sustainable because demand for the asset is recovering and growing at the fastest monthly pace since April.

Bitcoin in Positive Seasonal Performance

During bitcoin’s seasonal performance in the halving years of 2012, 2016, and 2020, the cryptocurrency increased by 9%, 59%, and 171%, respectively, in their fourth quarters. CryptoQuant analysts found that BTC is behaving very similarly to patterns seen in 2016 and 2020.

This positive performance is driven by the spike in apparent demand for BTC, which recorded a monthly growth of 177,000 BTC last week, its largest reading since April. Apparent demand refers to the difference between BTC production (mining issuance) and changes in its inventory (supply inactive for more than a year). This metric reached 496,000 BTC in early April, shortly after BTC rallied above $72,000 in March.

The surge in this metric preceded an over 5% rally in the price of BTC. The cryptocurrency touched a ten-week high of $68,100 earlier this week and was changing hands at $67,900 at the time of writing.

Demand Is Growing

Furthermore, the rise in BTC demand can be seen in the increased purchases of United States spot Bitcoin exchange-traded funds (ETFs). These products have been net buying roughly 8,000 BTC recently, their highest daily purchase since July 21.

Large bitcoin investors (whales) are also expanding their holdings, with their balances growing by 670,000 BTC yearly. Additionally, the growth of whale holdings stands above its 365-day moving average, which is considered a positive sign for prices.

CryptoQuant says the expansion of bitcoin’s apparent demand is necessary for BTC to surge sustainably to record highs. Historical data shows how positive and growing apparent demand led BTC price rallies in 2020-2021 and earlier this year. Apparent demand in those cases peaked at 490,000-550,000 BTC; however, current demand stands at 177,000 BTC. Hence, there is more room for growth.