Several on-chain metrics of the Bitcoin (BTC) network are showing buy signals after this year’s rally.
Bitcoin has come out of its slumber to post a 37% gain since the start of 2023. However, on-chain data still suggests that it could be a “generational buying opportunity,” according to analysts.
On January 24, researcher and tech analyst Game of Trades outlined six on-chain metrics to his 71,000 Twitter followers.
The first metric is an accumulation trend score that highlights areas of heavy accumulation in terms of entity size and number of coins purchased.
“Large entities have been in deep accumulation mode since the collapse of FTX,” the analyst noted, adding that “similar accumulations occurred in 2018 and 2020 funds.”
Bitcoin: 6 on-chain metrics that require a generational long-term buying opportunity
– Game of Trades (Game of Trades_) January 23, 2023
The adjusted sleep flow of a Bitcoin entity is a measure of the ratio of the current market capitalization to the annual sleep value.
When the dormant value exceeds the market value, the market can be considered to be in a state of complete capitulation, which has historically been a good buying area.
According to Glassnode, this metric fell to an all-time low in 2022.
Bitcoin reserve risk can be used to measure the long-term confidence of bitcoin holders in the price of BTC. This also fell to an all-time low at the end of 2022, according to data from Glassnode.
Bitcoin’s realized price (RP) is the value of all coins in circulation at the price they last moved – in other words, an estimate of what the entire market paid for its coins.
According to Woo Charts, Bitcoin has been trading below this level since the FTX crash in November until January 13th. It is currently slightly above the RP, which represents another buying opportunity.
The Bitcoin MVRV Z-Score shows when a BTC is overvalued or undervalued relative to its “fair value” or realized price. When the metric breaks out of undervalued territory, it is often considered the end of a bear market.
Finally, there is a Puell Multi that examines the basics of mining profitability and its impact on market cycles.
Lower values, as they currently stand, indicate miner pressure and represent long-term buying opportunities.
The analyst concluded that these six on-chain metrics “indicate an exceptional risk-reward setup in Bitcoin.”
They added that all metrics are at similar levels to the market cycle bottoms in 2015, 2018 and 2020.
At the time of publication, BTC was trading up more than 1.9% over the past 24 hours at $22,675, according to data from Cointelegraph.