This Bitcoin Rally Is Similar to the Origin Points of Historical Uptrends: Glassnode

Data from Glassnode shows that the structure of the current bitcoin rally is looking very similar to the origin points of historical uptrends.

Bitcoin’s Recovery From November Lows Reminiscent Of Past Rallies

In its latest weekly report, on-chain analytics firm glassnode It has been noted how the current bitcoin rally has matched up against similar rallies seen by the cryptocurrency during previous cycles.

To make this comparison, the analytics firm took data for coin performance starting from the all-time high in each cycle.

Here’s a chart that shows how past bearish market rallies have looked in the context of this metric:

The bear market rally performance throughout the different cycles | Source: Glassnode's The Week Onchain - Week 28, 2023

Note that only the outperformance of bitcoin is considered here, and the decline is excluded. From the chart, it is visible that throughout all cycles, the gains after the ATH was set disappeared over time as the bear market came into full swing.

Assets experienced a recovery rally in these cycles, soon after a bearish situation was created. So far in the current cycle, it is not entirely certain that the low seen in November 2022 after the FTX crash was in fact a cyclical low.

However, if it is assumed that this bottom was in fact the bottom, then the rally that has been going on in the last few months will act as a recovery rally in the current cycle.

Interestingly, so far, the cryptocurrency has seen a 91% increase since the bottom above, which is similar in scale to the recovery rallies of previous cycles.

Glassnode explains, “With the exception of 2019, all previous cycles that experienced a similar magnitude of bottom turn were actually the genesis point of a new cyclical uptrend.”

The reason 2019 is different is that the April 2019 rally (which can normally act as a recovery rally from bear market bottoms) ended much earlier and the price declined afterwards.

The drawdown was extended in March 2020 as the emergence of COVID-19 caused the crash. It is the recovery rally from this decline that ultimately led to the bull market in 2021.

Naturally, looking at the patterns of the first two bitcoin cycles, the current recovery rally structure could mean that the asset is now headed for a cyclical uptrend.

The analytics firm has looked at the rally from another angle as well: this time in terms of downtrend (i.e. negative performance).

The drawdowns across the bull markets | Source: Glassnode's The Week Onchain - Week 28, 2023

As shown in the graph, the bitcoin rally has seen a peak drawdown of only 18% so far, which is clearly much smaller than previous bull markets. Glassnode suggests, “This probably indicates relatively strong demand in the core of the asset.”

btc price

At the time of writing, bitcoin is trading around $30,400, down 2% over the past week.

BTC has continued its sideways movement recently | Source: BTCUSD on TradingView

Featured Image from iStock.com, Chart from Tradingview.com, Glassnode.com