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Recent rally still does not signify the start of a bull market, suggests Glassnode

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Cryptocurrency analytics firm Glassnode is still not convinced that bitcoin, ethereum and other cryptos are on the road to recovery after the recent market rally.

In a new report, Glassnode noted that demand for on-chain transactions for Bitcoin (BTC) remains “lack at best.”

“The net result is that Bitcoin blocks are partially empty, Ethereum gas prices are at multi-year lows, and the burn rate of EIP1559 is at its all-time lows.”

As the chart below shows, the analytics firm considers the number of bitcoin transactions to be showing bear market recovery behavior.

Number of transactions per second on the Bitcoin network
Source: Glassnode

When demand picks up, it could be a sign that BTC will enter bull market territory. The last two cycles showed the same behavior of rates, an increase in the demand for transacting on the network until the “destruction” of this demand.

Total fees in BTC on the Bitcoin network
Source: Glassnode

Glassnode also noted that Bitcoin (BTC) and Ethereum (ETH) have seen some encouraging increases in terms of outgoing profit rates (SOPR).

“Attention may now shift to whether these uptrends can be sustained and improve, as an indicator as to whether this is a simple bear market alleviation or a more constructive structural change.”

The on-chain SOPR metric determines whether cryptocurrency traders are selling at a profit or a loss. If SOPR is greater than 1, asset holders are selling at a profit. Otherwise, they are selling at a loss.

Glassnode explains:

“For Bitcoin, SOPR is trying to break above 1.0 for the second time since early June. Typically, the market requires several attempts before escape velocity can be reached. An ideal bullish scenario would be a breakout above 1.0 and then a retest, finding support.

Ethereum was luckier, breaking through a SOPR value of 1.0 and finding its first retest as support.”

Whether the crypto market will enter a bull market in the near future, only time will tell. In the meantime, join our Discord group to be part of building the best crypto community in Brazil.

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