Bitcoin Needs One More On-Chain Signal for Bull Market, Analyst Says

Bitcoin (BTC) is on the brink of a classic bull market revival, with analyst David Puell noting that just one more key on-chain signal is required to confirm the trend reversal. In a tweet on Dec. 17, Puell, the creator of the Puell Multiple, outlined the current state of the market, emphasizing that the conditions for a BTC price recovery are nearly in place.

Despite a prevailing sentiment among some market participants that Bitcoin could plunge to new lows—potentially dropping to $12,000 or even lower—Puell highlights a more optimistic perspective. He pointed out that two crucial on-chain phenomena are already evident in the current landscape:

• Long-term holders (LTHs) are holding firm: Many investors have resisted the temptation to sell, even with Bitcoin trading over 70% down from its previous all-time high.
• Painful losses are felt by short-term speculators: Recent adverse price movements have likely chased away many inexperienced investors, often referred to as ‘tourists.’

Puell believes that the final piece needed for a recovery is a marked increase in network activity across all Bitcoin participants. He elaborated:
“On-chain, three factors are needed for a bull: 1. Holding behavior from long-term investors. 2. Painful losses from short-term speculators. 3. Network activity across the board.” He concluded, “Personally seeing 1 and 2. 3 is still underwhelming.”

Favorable macroeconomic conditions could provide the necessary tailwind for Bitcoin’s resurgence, particularly as the cryptocurrency landscape becomes more resilient to shocks from various external and internal sources.

At the time of writing, BTC/USD was trading at around $16,700, according to data from Cointelegraph Markets Pro and TradingView. In light of these developments, the community is reflecting on past bear markets while keeping an eye on potential rebounds.

Analysts, including the popular analytics account Dilution-proof, have pointed to similarities in price performance, as Bitcoin appears to be mirroring behaviors seen in previous cycles. They highlighted Bitcoin’s MVRV-z score—a metric reflecting the relationship between market cap and realized cap—which suggests a classic bear market bottom formation is underway.

As the market anticipates possible changes in trajectory for Bitcoin, both traders and long-term holders are advised to remain vigilant, particularly as key dates for macroeconomic data loom on the horizon.

Overall, Bitcoin’s journey toward recovery hinges on various factors, and while cautious optimism abounds, there is an ongoing narrative around its long-term potential as a resilient asset.