Since March’s lows, Bitcoin has gained over 100 percent, outperforming most other over $100 billion assets within the same time frame.
Yet, this may be the start of an even greater rally with a top on-chain analytics firm affirming that per their data, BTC is just transitioning to a “bullish” market regime, exiting the bear market it was embroiled in prior to the recent gains.
Bitcoin’s bullish market regime
With there being no cash flow statements and balance sheets to scrutinize to value Bitcoin, analysts have turned to the next best thing: on-chain data.
Due to the fact that blockchains are public, their data can be crawled by analysts to determine the health of a network, the composition of users, among many other things.
Glassnode, a leading firm in this field, has long leveraged this feature of blockchains. And just recently, it decided to fit that data into a market valuation model dubbed “Glassnode On-Chain BTC Index,” or GNI.
The GNI is derived from a number of indicators such as network growth, Bitcoin transactions, and investor sentiment in an aim to “yield insights” into “where Bitcoin may evolve.” This, in turn, can give the company expectations as to how the cryptocurrency market will develop:
“Historically strong on-chain fundamentals coincide with good Bitcoin performance and vice-versa,” the firm wrote in the report, referencing their backtest of the accuracy of the GNI.
The data company found that by charting Bitcoin’s GNI and quarterly returns (in percent), you can determine which way BTC is trending on a macro scale. Glassnode wrote that as of May 3, BTC “has been moving strongly towards the bullish quadrant,” suggesting a bull market is imminent.