After hitting a bottom of around $15,500, Bitcoin (BTC) entered a period of accumulation and slow growth that characterized an early bull market. Historically, the period of a mature bull market began approximately six months after the halving, but this time, the situation looks different: some on-chain indicators are already signaling its start. Let’s figure out whether the scenario of previous cycles will repeat itself.
Short-term Holders are Buying Bitcoin
The first on-chain indicator that indicates the beginning of a mature bull market was “Realized Cap HODL waves”. This metric shows changes in the distribution of coins depending on the holding period and behavior of their owners. Typically, short-term HODL waves (red and orange, less than 6 months) contract during a bear market. During a bull market, on the contrary, the share of long-term waves (green and blue, more than 6 months) decreases as owners sell long-held bitcoins.
At the top of the cycle, most coins are held for short periods (red areas). This condition quickly leads to a collapse and precedes a long-term bear market
On the other hand, after the end of declines, red and orange HODL waves remain flat for a long time and occupy a small market share. It is then that a sharp increase in their size is observed on the graph (green areas). If this interpretation is correct, Bitcoin has just entered a mature bull market. Historically, this has resulted in a new all-time high (ATH) that is multiples of previous peaks.
Long-term holders start selling
Another indicator that points to the same key point in the BTC market is called “Hodler Net Position Change”. This metric shows the monthly change in long-term investors’ (LTH) positions, making it clear when LTH is cutting (red) or accumulating (green) new net positions.
Historically, the greatest periods of position reduction are associated with market peaks (red areas). However, a decrease in BTC reserves associated with the capitulation of long-term holders can also be observed at the bottom of a bear market.
The onset of increased LTH selling activity (blue areas) most often indicates the beginning of a mature phase of a bull market. After these first signals of Bitcoin’s transition to short-term holders, its main phase historically begins (blue arrow).
However, it is worth remembering that the crypto market is still characterized by high volatility. However, in its mature phase, even major corrections can turn out to be excellent buying opportunities.
