On-Chain Data Shows Bitcoin Has Further Upside Potential

Bitcoin continues its incredible run in 2023, hitting a new high of $26,562, according to Glassnode data. The upside was driven by a number of factors, including institutional investment, growing demand from retail investors, and growing interest in cryptocurrencies as a hedge against inflation.

The Glassnode data highlights several key metrics that provide insight into Bitcoin’s current momentum. The 200-week simple moving average provides a tool to capture the underlying momentum of the classic four-year Bitcoin cycle.

Glassnode offers a technical pricing model

The 365-day SMA provides a long-term benchmark for market momentum on high time frames. Meanwhile, the fair value of long-term holders reflects the average on-chain purchase price of tokens held off-exchanges, which has not changed in the past 155 days.

Glassnode reports are based on cost

At the time of writing, the 200-week SMA is at $25,277 and the 365-day SMA is at $24,448. The fair value to the long-term holder is $21,958. These indicators suggest that Bitcoin is currently in a solid position with significant upside potential.

On-Chain Data Shows Bitcoin Has Many Upside Opportunities Ahead

The return on fees also points to more upside ahead, according to CryptoQuant data. The on-chain data shows a spike in return on fees, reaching a peak of 0.05 in 2023. This structure could indicate that an uptrend awaits, with the spot price moving towards the current “reasonable level” of $42,657.

The upward trend in return on fees suggests more upside | Source: CryptoQuant

The fair price correlates closely with the previous 2019 pattern, which predicted Bitcoin would hit $46,092 this year. The change from the accumulation cycle to the distribution cycle can also be predicted by the cost-reward ratio, which tends to peak before each distribution cycle. This phenomenon happened in 2019 and 2020, and recent data suggest it is happening again.

All in all, Bitcoin’s outperformance looks set to continue and the cryptocurrency could see further gains in the months ahead. On-chain data provided by Glassnode and CryptoQuant shows that Bitcoin is currently in a strong position with huge upside potential.

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