FX.co ★ Slow hoarding and low investor returns: why bitcoin is only approaching a bull market

September is coming to an end and investors are perplexed why BTC is within $45,000. After the summer FUD, the market was expecting a short-term consolidation in August and the launch of a bull market in early September. This scenario seems to be approaching. However, some factors and bad news triggered several marked declines in the cryptocurrency market. This was the reason to resume making savings, as a pool of available coins was formed in the market. This fact exerted pressure on the price. However, even despite the current situation, there are many factors in the market that point to the coming bull market launch.

Before discovering the on-chain metrics, it is worth outlining what exactly did not meet the market's expectations. First of all, taking into account the historical context, the bullish trend set since February was similar to the dynamics of 2017. However, the market has already had a negative response to the possibility of correlation in the summer. Considering this fact, medium-term investors expected to see substantial gains from BTC by the end of September, rather than fluctuating near $45,000. The need for additional consolidation and accumulation periods were caused by several factors: local bubble in the altcoin market, fundamental factors related to global inflation processes and another FUD by the Chinese authorities, due to which bitcoin's hash rate reduced the rate of recovery. However, even in this situation, there are visible prerequisites for bitcoin to start rising in the near future.

Let's start with a large-scale on-chain chart, demonstrating the net unrealized gains and losses of coin owners (NUPL). This indicator is great for showing current market sentiment and the likely end of a global bull trend cycle. When the indicator crosses 0.5, it is considered a bullish trend. According to the data, in February 2021 the indicator made a local high and did not cross 0.7 again, which marks the current trend apart from other years' readings. According to historical context, a bull market lasts about a year. Considering the charts data, bitcoin is approaching its yearly high. Taking into account the historical context, the uptrend will end as early as the end of October. However, the NUPL did not drop below 0.5 during the accumulation period in August and early September. It may indicate a local shift of the trend line and its continuation, as the market did not let the indicator to fall lower, but it was not in the growth phase. In any case, on September 30 the chart gained an uptrend after the decline on September 13. While it keeps above 0.5 and actively recovers above this area, we may expect the beginning of a bull market.

Other on-chain metrics, such as ascending dynamics of the ratio of longs to shorts, are signs of buying and making gains. The indicator has crossed the zero mark in the last month and a half and continues to move upward. On September 30, the indicator is at +5%, and market players will try to take more profits. The same can be observed on the charts of the 30-day MVRV, which broke above the 2% mark. This is an extremely low profit rate, and therefore it would be logical to assume that investors are set to increase income and price growth.

Besides, the final fact confirming the accumulation period is the analysis of the on-chain indicator, which displays the trend of coin accumulation. Small players (balance less than 1 BTC) continue to slowly but surely accumulate coin volumes. Investors with balances from 1000 to 100,000 BTC also show ascending dynamics of coin number. The only problem is the small number of players in the market accumulating volumes, which is reflected in Active Addresses metric. In general, bitcoin's situation is improving, though the price cannot go beyond the current fluctuation range. Consequently, there is one positive conclusion, according to which the main audience of bitcoin is accumulating volumes of BTC or continues to hold coins. At the same time, the number of available coins on the platforms is decreasing, which indicates the soon end of the accumulation period, which will pass to the growth one.