While Bitcoin has panicked investors for a while, certain indicators show results signifying a good time for the asset.
The Long-term Bitcoin holder behavior is considered to be one of the most reliable factors to assess the asset’s performance, the market’s top, and the market’s bottom. The long-term Bitcoin holders are the wallet addresses that haven’t moved their holdings in the past six to twelve months.
The Short-to-long-term realized value (SLRV) ratio’s values signify the percentage of Bitcoin in existence, the amount moved within the past 24 hours, and divides the percentage of coins last moved within the past six to twelve months.
High values of the SLRV Ratio signify that the short-term Bitcoin holders have become more active and are more engaged on the asset’s network. Thus, it implies a looming market top and suggests market boost is at full pace.
Contrarily, low values of the SLRV ratio indicate the absence of short-term holder activity and the increasing values of long-term holders.
It is also possible to study the positive and negative trends in the market by applying the SLRV Ribbons to SLRV ratio. It also helps to identify the transitions between risk-on and risk-off allocations to Bitcoin. Risk allocation is identifying risks and determining how and to what extent they should be shared.
The SLRV ribbons in the graphs from Glassnode, a blockchain analytics firm studied below, observe the 30-day and the 150-day moving average of the SLRV ratio.
Looking at the historical SLRV ratio, we observe that the uptrend phase generally remains below the ratio value of the downtrend 30- and 150- day phases during a bearish phase. However, the transfer of dominance can be seen in 2012, 2015, and 2019, each implying a change in the market sentiments and calling in the bull phase.
Now coming to the graph for SLRV ratio data of this year, we observe that March was the last time Bitcoin experienced an uptrend phase, followed by a downtrend phase in June. This downtrend observed an SLRV ratio above 0.8 in September but gradually reduced around mid-November.
We can also observe that in December, the SLRV uptrend phase ribbon rose above its counterpart. Analysts expect this uptrend to continue in the coming times, following the same trend as 2015 and 2019, as displayed in the first graph.
This year, an uptrend bullish sentiment has been observed twice, once around mid-November when Bitcoin was trading around $16,800 and before that in March before the collapse of Terra Luna.
Also, in November, during the collapse of FTX, the indicator’s value fell as low as 0.019, thus implying a value associated with the long-term bottoming phase of a bear market and a switch in the flow towards a bull market.
In November following the market crash many also compared the prevalent Bitcoin bearish trend to the bear market of 2018-2019.