Bitcoin “Liveliness” Indicator Shows Signs of Continued Bull Cycle

Bitcoin “Liveliness” Indicator Rises, Hinting the Bull Cycle May Not Be Over

The Bitcoin “liveliness” indicator, an important on-chain metric, is currently on the rise, which historically correlates with bull market trends. This development suggests that the ongoing cycle might still have potential for growth, according to experts analyzing long-term blockchain data.

Key Takeaways:

The Bitcoin “liveliness” metric is increasing even as prices remain flat, indicating an underlying demand resurgence.
Analysts point to an unprecedented movement of dormant coins, suggesting a significant rotation of capital.
The breakout of this indicator from a stagnating range hints that the current bull market may not be over.

Technical analyst TXMC noted on Sunday that liveliness continues to climb despite lower Bitcoin prices, indicating a steady demand for spot Bitcoin as market sentiment remains low.

Bitcoin’s Rising “Liveliness” Metric Suggests Renewed Demand for Bull Market

The term “liveliness” refers to a sophisticated long-term measure of blockchain activity. It assesses the ratio of coins being transacted compared to those that are being held, taking into consideration the age of these coins.

This metric rises when older coins are reused more frequently, and it declines when long-term holders retain their assets.

According to TXMC, “Liveliness generally increases during bull markets as more supply changes hands at higher prices, reflecting a movement of new investment capital.” The current increase contradicts the relatively stagnant price trends observed in recent weeks.

Data from Glassnode shows that Bitcoin liveliness has reached a new peak, breaking free from the range it occupied between the 2017 all-time high and previous cycles.

Analyst James Check commented that the current surge in liveliness points to an unprecedented revival of dormant Bitcoin. This activity exceeds previous patterns seen during the 2017 bull cycle, which was marked by extensive participation and significant price increases.

However, this current trend is characterized by much grander scale. In 2017, transfers were often observed in thousands of dollars; today, the values seen on the blockchain can escalate into billions, indicating one of the most substantial capital rotations in Bitcoin's history.

“We have recorded an exceptional volume of 'coin days destroyed',” Check explained. “I believe we have just witnessed one of the most significant changes of capital and ownership in Bitcoin’s history.”

BTC Price Positions Amidst Stalling Market; Analysts Eye Possible Breakouts

Despite the positive indicators in on-chain activity, Bitcoin’s price remains rather subdued. The cryptocurrency briefly fell below the $89,000 mark early on Sunday, only to rise again to around $89,500, showing minimal change over the preceding 24 hours.

Analyst Michaël van de Poppe remarked that the market appears to be caught in a consolidation phase: “Anything between $86,000 and $92,000 is effectively noise.”

He anticipated that testing the $92,000 mark could trigger a price breakout. On the other hand, a failure to break through that level could push Bitcoin down into the low $80,000s, potentially forming a double-bottom pattern.

“I believe that Bitcoin is nearing its bottom,” van de Poppe predicted, suggesting a stronger rally could unfold as we head into late Q4 and early Q1.

Last week, Bitfinex observed signs of “seller exhaustion” in the market following a period of aggressive deleveraging and panic-driven exits by short-term holders.

“The mixture of intense deleveraging, capitulation among short-term holders, and early indicators of seller fatigue has set the stage for a stabilization period and a possible relief bounce,” the company noted.