Featured SpeakerAlex Thorn
Head of Firmwide ResearchGalaxy
Hear Alex Thorn share his take on “Bitcoin and Inflation: It’s Complicated” at Consensus 2023.
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Omkar Godbole is a Co-Managing Editor on CoinDesk’s Markets team.
Featured SpeakerAlex Thorn
Head of Firmwide ResearchGalaxy
Hear Alex Thorn share his take on “Bitcoin and Inflation: It’s Complicated” at Consensus 2023.
A lesser-known but historically reliable bitcoin price indicator has flipped positive, signaling the onset of a major bull market.
Bitcoin’s reserve risk multiple has crossed above zero, turning positive for the first time since October 2021, according to blockchain analytics firm Glassnode.
The previous crossovers above zero paved the way for parabolic price rallies. “In 2012, 2013, 2015, 2019, and 2020, it resulted in gains of 2,830%, 566%, 6,400%, 99%, and 487%, respectively,” on-chain analyst Ali Matrinez tweeted Monday.
Glassnode defines reserve risk as a long-term cyclical indicator, comparing the incentive to sell at the going market price to long-term holders resisting the temptation to liquidate. A lower reading indicates strong conviction among HODLers – slang for long-term crypto investors – and vice versa.
The reserve risk multiple is calculated by dividing the daily indicator value by its 365-day moving average.
Previous crossovers above zero paved the way for sharp price rallies. (Glassnode, Ali Martinez) (Glassnode, Ali Martinez)
The reserve risk multiple’s previous crossovers above and below zero accurately predicted major bullish and bearish trends.
If history is a guide, the latest positive crossover means the cryptocurrency’s 80% year-to-date rally to ten-month highs above $30,000 may be only the first milestone in its upward journey.
The bullish implication is consistent with bitcoin’s tendency to chalk up outsized rallies in months leading up to the mining reward halving. This programmed code reduces the pace of the cryptocurrency’s supply expansion by 50% every four years. Bitcoin’s fourth reward halving is due in April next year.
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Omkar Godbole is a Co-Managing Editor on CoinDesk’s Markets team.
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Omkar Godbole is a Co-Managing Editor on CoinDesk’s Markets team.
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