Bitcoin on chain analysis: animation warning suggests accumulation ahead of parabolic rally

Bitcoin Magazine will examine Bitcoin’s on-chain index (BTC) in terms of longevity, more precisely the indicator of liveliness.

Bitcoin vibrancy

The liveliness indicator is a metric that gives insights into the behavior of the owners. The value increases as the holders begin to liquidate their positions and decreases when these coins dormant. The indicator fluctuates between 0 and 1.

On-chain analyst @kenoshaking made an interesting observation during times of high liveliness.

The source: Twitter

Initially, the indicator turned up, suggesting a sale by long-term owners. This usually happens during the early bull market when the BTC rallies become parabolic (red line).

After that, the indicator fell very slowly over a long period of time (black line). This means that long-term owners are accumulating in preparation for the next uptrend.

Interestingly, these clusters grew longer with each cycle.

The first wave lasted 18 months, the second wave 32 months. The third and current batch is still running.

In February 2018, the liveliness is 0.62. It did so shortly after BTC hit its all-time high in December 2017. Since then, the index has fluctuated between 0.62 and 0.58 and is currently 0.61. In the past 46 months, the liveliness has decreased significantly.

Compared to previous cycles, this means Bitcoin’s parabolic movement, the time when long-term holders take profits, has not even begun.

The source: Glass knot

Short term reading level

Between October 2020 and August 2021, vibrancy rose from 0.59 to 0.62, the sharpest increase since the February 2018 high mentioned above.

On August 5, 2020, it reached a new all-time high of 0.6225 (blue circle), and the index has been falling steadily since then.

Historically, it is possible that this was the start of a parabolic uptrend, while the current decline is an accumulation phase.

Hence, it can only be part of a long-term cycle that has been repeating itself since 2011.

The source: Glass knot

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