Bull market signal? How long will Bitcoin stay above $30,000?

Bull signal? How long will Bitcoin stay above $30,000?

The current price of Bitcoin is at the “midpoint” of the 2021-2022 cycle, at $30,000. Several indicators of Bitcoin are also approaching the level of the “reaccumulation phase” in the previous cycle. Although the recent hype of Inscriptions is cooling down, the Bitcoin trading market is becoming active again.


Bitcoin Remains Strong

Since 2023, the Bitcoin market has maintained a continuous growth momentum, rebounding to above $31,000 in recent weeks and consolidating around this price level. If we assume that the low point in November 2022 is the bottom of the cycle, we can compare the magnitude of the “pullback” from that time to the present. Next, we will compare this price performance with the previous cycle from the perspectives of “high points” and “low points”.

Compared to the high point in 2023, the maximum price decline during the year is only -18%, which is very shallow compared to all previous cycles. This may indicate the strong demand for Bitcoin in the current market.

Figure 1: Magnitude of Pullback

Now let’s look at the low point. The strong rebound that started from the November low has risen by 91%, which is very similar to the rebound magnitude in previous cycles.

Except for 2019, all previous cycles that experienced similar bottoming rebounds were actually the starting point of the upward trend in the new cycle.

Figure 2: Rebound Performance

Cooling of Inscriptions, Bitcoin Reheating

One of the most surprising events in 2023 is the emergence of Ordinals and Inscriptions on Bitcoin, bringing two different Inscriptions trends:

  • The first type: mainly image-based Inscriptions, giving rise to NFTs in the Bitcoin ecosystem. So far, a total of 1.08 million images have been inscribed.

  • The second type: mainly text-based Inscriptions related to “BRC-20” tokens. Bitcoin currently has 14.8 million text-based inscriptions.

In terms of the number of Inscriptions, the second type has a larger scale, but its activity has been continuously declining since May. This week, text-based Inscriptions experienced a brief recovery, and the number of unconfirmed transactions in the Bitcoin memory pool also started to decrease.

Figure 3: Inscriptions Data

At the same time, we have also discovered a very interesting phenomenon in the on-chain activity indicators. Generally, the increase in on-chain activity indicators of Bitcoin is a signal of usage growth and network health (i.e., increasing is usually a positive phenomenon).

However, at the same time, a large number of addresses are reused, and the transaction volume related to Inscriptions is very small (~10k sats), which reduces the demand for block space dominated by Inscriptions.

Therefore, in order to explain the overall high demand for Bitcoin blocks, we need a more detailed explanation. The summary is as shown in the following table:

Table 1: Increase in on-chain activity indicators

As can be seen, with the cooling of Inscriptions’ popularity, the momentum of current active Bitcoin addresses is picking up again. Some people may think that this is because the Bitcoin network activity decreased in the previous 2-3 months, but in fact, at that time, it was only Inscriptions traders using a large number of repeated addresses, and the network activity was actually booming, and the block space was also crowded.

Figure 4: Growth trend of new Bitcoin addresses

Due to the application of SegWit, the number of Bitcoin transactions has also reached a new high. This means that miners can pack more transaction data in each block, and some blocks are even close to the theoretical limit of 4MB.

In recent weeks, the daily trading volume of Bitcoin has also significantly decreased, consistent with the trend of slowing down Inscriptions activity.

Figure 5: Bitcoin transaction activity

After several months of network congestion, the Bitcoin memory pool is slowly clearing, and on-chain transaction fees are also starting to decline. Since the explosion of Brc-20 in May, Bitcoin transaction fees denominated in US dollars have dropped by more than 96%, with the current average fee at $1.33 and the median fee dropping to $0.16.

The fee indicators indicate that on-chain transaction activity is slowing down overall.

Figure 6: Average and median fees (USD)

While on-chain transaction activity is slowing down, the amount of BTC traded is increasing. The current BTC transaction volume is 75% higher than the low point during the FTX explosion period, and the current settlement amount reaches $4.2 billion per day.

Figure 7: Settlement amount (USD)

If we only look at the inflow and outflow of trading platforms, we will find that the Bitcoin network is entering a period of vigorous development. The monthly average of trading platform traffic remains higher than the annual average. From the perspective of assets, this is a good phenomenon, indicating that more and more people are using Bitcoin.

Although some other on-chain activity indicators are cooling down, this indicator is enough to indicate that Bitcoin’s dominant position is returning.

Figure 8: Trading platform traffic

From this activity related to trading platforms, we can establish an NVT price model. The purpose of this model is to provide a “fair value” for a given settlement of on-chain transaction volume.

The short-term (28-day) NVT price model indicates a “fair value” of $35,900, which is the first time since November 2022 that this price has exceeded the spot price. The 90-day model has also sharply increased, rising from a level of $24,700.

Figure 9: NVT price model for inflows on trading platforms

A Solid Foundation

As discussed earlier, we have established that the recovery of the Bitcoin market in 2023 is very strong, both in terms of price performance and network usage. The following graph can help us better understand this, as it shows the approximate situation of buying Bitcoin at prices below $30,000.

We can see that a significant amount of Bitcoin was purchased between $15,000 and $30,000, indicating a large number of Bitcoin transactions in the past 12 months. In contrast, only 25% of Bitcoin supply was acquired at prices above $30,000, with trading occurring between 2021 and 2022.

Figure 10: Distribution of realized prices

We can introduce long-term and short-term holders into the distribution of realized prices, and draw the following conclusions:

  • Blue area: A significant amount of Bitcoin held by long-term holders was purchased between $15,000 and $25,000 (thus profitable), and despite the price reaching $31,000, it has not yet been sold.

  • Blue area: Almost all Bitcoin purchased at prices above $30,000 is held by long-term holders. These investors are either survivors of the 2021-2022 bear market, seasoned HODLers, or people preparing to sell when prices rebound.

  • Red area: Despite the aggressive stance of U.S. regulatory agencies, Bitcoin transactions in the range of $20,000 to $30,000 have continued to increase since February.

Overall, the distribution of Bitcoin supply is relatively stable, with holders’ “cost basis” relatively low, averaging below $30,000.

Figure 11: Distribution of realized prices (long-term/short-term holders)

According to the chart below, during the recent Bitcoin price adjustment to $25,000, we can see that the number of Bitcoin transitioning from a “loss” state to a “profit” state is approximately 2.47 million, which is equivalent to 12.7% of the total supply.

Conversely, the number of Bitcoin in a “loss” state has dropped to 4.79 million, similar to the quantities observed in July 2021 ($30,000), July 2020 ($9,200), April 2016 ($6,500), and March 2016 ($425).

Figure 12: Bitcoin in “profit” and “loss” states

History Always Repeats Itself

In different cycles, Bitcoin’s data always shows astonishing similarities. In the 2021-2022 cycle, the $30,000 price level can be seen as a “midpoint” to some extent, fluctuating above and below that point.

In the 2013-2016 cycle, $425 was also a very similar “midpoint”, as was $6,500 in the 2018-2019 cycle. The “loss” supply at these price levels is highly similar.

Figure 13: Comparison of Midpoints in the Cycles

As the market price consolidates below the $30,000 “midpoint”, we can see that around 75% of the total Bitcoin supply is in a profitable state, while 25% is in a loss state. This ratio is the same as when the price reached a midpoint in 2016 and 2019.

This 75:25 balance of profit and loss can also be seen as the overall balance of Bitcoin. On any given trading day, 50% of the trading days have a profit and loss balance higher than this point, while 50% have a balance lower than this point.

Figure 14: Profitable Supply Percentage (7D)

In history, this balance point has persisted for a period of time, and many Bitcoin analysts refer to it as the “re-accumulation phase”.

We can intuitively understand this by observing the proportion of unrealized losses (purchases made at a higher price than the market price but not yet sold). In the early bear market, the market was in a loss state, and investors gradually exited. Then the market rebounded from its low point, and profitability rapidly recovered to levels similar to today.

A characteristic of the previous “re-accumulation phase” was the lack of macro market direction, often lasting for several months at this point. Whether breaking this balance point currently requires a long and tortuous process like this remains to be seen.

Figure 15: Unrealized Losses


The price of Bitcoin is currently consolidating, below the $30,000 “midpoint” of the 2021-2022 cycle, while several indicators have reached the relevant balance points of the midpoint. This is the same as the “re-accumulation phase” in past cycles, characterized by almost no macro direction over several months.

However, the price performance from the beginning of the year until now has been relatively strong, with the largest decline so far being only -18%. Bitcoin’s on-chain activity has declined, mainly due to the decrease in inscriptions activity. However, Bitcoin trading volume is starting to rebound, and the liquidity and usage situation is gradually showing positive trends.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!


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