Bitcoin: Evaluating if investors are seeing a bear market rally

ambcrypto.com:

Bitcoin, the largest cryptocurrency has rallied strongly off the bottom, reaching above the $23k mark. So does this imply the beginning of the bull market?

Well, Glassnode in its latest weekly ‘On Chain’ report on 1 August shed some insight on this narrative. The report assessed if the current market momentum was a vote to the bear market rally.

Bitcoin would need to do more to escape the looming bear trap as per the report.

BTC’s number of active addresses remained within a well-defined downtrend channel in the graph below.

Source: Glassnode

Notably, the October-November all-time high (ATH) reached a significantly lower peak than the April 2021 ATH. Ergo, suggesting a major washout of users had occurred, and demand didn’t quite follow through. In this regard, the report asserted,

“With exception of a few activity spikes higher during major capitulation events, the current network activity suggests that there remains little influx of new demand as yet.”

Glassnode in the graph noted this as a “low bear market demand profile” which has been in effect essentially since last December.

Two more indicators painted a similar sketch- Namely, the number of transactions per second and the total transaction fees.

Generally, a bull market showcases elevated fee rates. However, that’s certainly not the case here. The graph below saw no notable uptick in fees. Herein, the on-chain transaction fees, firmly within a bear market territory, saw only 13.4 BTC in total fees paid per day.

For context, when prices reached ATH last April, daily network fees topped 200 BTC.

Source: Glassnode

Even the demand for on-chain transactions had dried up, similar to the one established in the 2018-2019 period.

After the initial wash-out and demand destruction in May