A key on-chain indicator associated with Bitcoin, referred to as “liveliness,” is experiencing a notable increase, which has historically been correlated with bullish market trends. Analysts monitoring long-term blockchain metrics suggest that this upward movement could indicate that the current market cycle has the potential for further growth.
Recent analyses reveal that Bitcoin’s liveliness metric is on the rise, even as the cryptocurrency’s prices remain somewhat stagnant. This trend points to renewed underlying demand among investors. According to technical analyst TXMC, the liveliness metric has been “marching higher despite lower prices,” highlighting a divergence that suggests a steady demand for Bitcoin, despite a prevailing muted market sentiment.
The liveliness metric functions as a sophisticated long-term measure of blockchain activity, evaluating the ratio of coins being transacted against those held, taking into account the age of the coins. An increase occurs when older coins are re-circulated more frequently, while a decrease indicates that long-term holders are accumulating. TXMC explained that typically, liveliness tends to rise during bull markets when supply changes hands at higher prices, signifying an influx of new capital. However, the current uptick in liveliness stands in stark contrast to the recent flatness in Bitcoin’s price.
Data from Glassnode highlights that liveliness is reaching new peak ranges, breaking free from a corridor it had been confined to since the 2017 all-time high, which indicates a significant shift in capital movement. Analyst James Check noted that the recent spike reflects an unprecedented activation of dormant Bitcoin supply, surpassing patterns observed during the previous bull run characterized by extensive participation and an explosive price surge.
The current environment appears more dynamic compared to 2017, where transaction flows during that period were typically measured in thousands of dollars. Check remarked that today, on-chain value flows often amount to billions, hinting at one of the largest capital rotations in Bitcoin history. He highlighted the extraordinary volume of “coin days destroyed,” stating, “We have just witnessed one of the greatest capital rotations and changes of the guard in Bitcoin history.”
Despite this on-chain strength, Bitcoin’s price remains relatively stagnant. It briefly dipped below $89,000 but managed to recover to the $89,500 mark, showing little change over a 24-hour period. Analyst Michaël van de Poppe indicated that the market appears to be in a consolidation phase, with the current range between $86,000 and $92,000 showing little significance. He suggested that a test of the $92,000 level might lead to a breakout, whereas failure to surpass this level could drive Bitcoin into the low $80,000 range, potentially forming a double-bottom pattern. Van de Poppe is cautiously optimistic, remarking that a stronger rally could materialize as the market approaches late Q4 and early Q1.
Furthermore, Bitfinex’s recent analysis extended insights into the current market conditions, noting signs of “seller exhaustion” following a period of heavy liquidations and panic-induced exits by short-term holders. The combination of extreme deleveraging, capitulation among short-term investors, and initial indications of seller fatigue has created a backdrop conducive to market stabilization and a potential relief rally.
