This Indicator Suggests It’s Still Too Early to Bet on Bitcoin Bull Run

In wake of the impressive rally in Bitcoin’s price since the start of the year, multiple technical and on-chain indicators have started flashing green that the bear market of 2022 might be over. For example, Bitcoin’s latest push higher that has seen it recover above $21,000 from its end of 2022 levels around $17,000 has seen the world’s largest cryptocurrency by market capitalization break back to the north of its 200-Day Moving Average and Realized Price, both of which sit just under $20,000.

Momentum in new addresses also recently took a turn for the better, with the 30-day simple moving average (SMA) recently jumping above the 200-day SMA, a shift which often occurs at the start of a Bitcoin bull market.

Meanwhile, according to analysis from pseudonymous Twitter account @CryptoHornHairs, Bitcoin appears to be tracking almost exactly in line with a long-term market cycle that repeats itself roughly every four years. According to @CryptoHornHairs, Bitcoin is at the beginning of the bullish stage of the cycle, having just come through a 364-day downturn.

$BTC #Bitcoin
2015-2017 bull market: 1064 days
2017-2018 bear market: 364 days

2018-2021 bull market: 1064 days
2021-*current* market low: 364 days

Days left until the top if we just carbon copy the cycle timeframe again: 1001 days pic.twitter.com/KoNZxJRuy5

— HornHairs 🌊 (@CryptoHornHairs) January 12, 2023

But This Key Indicator Not Flashing Green Just Yet

However, investors should note that one key on-chain indicator is not sending bullish signs. Glassnode’s Revenue From Fees Multiple still has a negative 2-year Z-score of around -0.41. The Z-score is the number of standard deviations above or below the mean of a data sample. In this instance, Glassnode’s Z-score is the number of standard deviations above or below the mean Bitcoin Fee Revenue of the last 2-years.

“A sustained uptick in fee revenue as a proportion of the total reward indicates that Bitcoin blocks are full, and there is growing demand for transaction activity,” the crypto analytics firm states. “Given the constrained blocksize of Bitcoin, this has historically provided a valuable early indicator of a macro trend shift in the network demand profile”.

Thus, Bitcoin’s weak Fee Revenue momentum should be a red flag for the bulls, as it implies weak on-chain activity. However, as history has shown, this indicator can quickly swing in a positive direction. All it might take is for a continued grind higher in Bitcoin in the coming weeks and months to trigger a bit of FOMO amongst the retail crowd and institutions, and on-chain activity might start showing strong signs of a pick-up.