Several on-chain metrics from the Bitcoin (BTC) network are showing buy signals after this year’s rally.
Bitcoin has broken out of its torpor and has gained 37% since the beginning of 2023. However, the on-chain data still signals that it could be a “generational buying opportunity,” according to analysts.
On Jan. 24, researcher and technical analyst Game of Trades identified six on-chain metrics for its 71,000 Twitter followers.
The first metric is an accumulation trend score that highlights zones of strong accumulation in terms of company size and number of coins purchased.
“Large companies have been in deep accumulation mode since the FTX collapse,” the analyst noted, adding that “similar accumulation occurred in the 2018 and 2020 lows.”
Bitcoin: 6 on-chain metrics that require a multi-generational long-term buying opportunity
— Trading Game (@GameofTrades_) January 23, 2023
Bitcoin Entity-Adjusted Dormancy Flow is a measure of the ratio of current market cap to annualized dormant value.
Whenever the resting value exceeds the market cap, the market can be considered fully capitulating, which has been a good historical buying zone.
According to Glassnode, this metric fell to an all-time low in 2022.
Quiescent current adjusted by the BTC entity. Image: Glassnode
Bitcoin’s reserve risk can be used to gauge long-term holders’ confidence in BTC’s price. This value also fell to its lowest level ever in late 2022, according to Glassnode data.
Bitcoin’s realized price (RP) is the value of all coins in circulation at the price they last moved at – in other words, an estimate of what the entire market paid for their coins.
According to Woo Charts, Bitcoin has been trading below this level since FTX collapsed in November through Jan. 13. It is currently trading just above the RP, providing another buying opportunity.
The Bitcoin MVRV Z-Score indicates when BTC is significantly over or undervalued compared to its “fair value” or realized price. When the metric exits the extreme undervalued zone, it is often seen as the end of the bear market.
BTC’s MVRV Z-Score. Image: Glassnode
Finally, there is the Puell Multiple, which examines the fundamentals of mining profitability and their impact on market cycles.
Lower readings, as they currently are, indicate miner stress and represent long-term buying opportunities.
Related: Bitcoin halts volatility at $23,000 as BTC traders see mass return to profit
The analyst concluded that these six on-chain metrics “suggest an exceptional risk-reward setup in Bitcoin.”
The metrics are all at similar levels to the market cycle bottoms in 2015, 2018 and 2020, they added.
At the time of publication, BTC is trading up over 1.9% at $22,675 over the past 24 hours, according to Cointelegraph data.