May 23, 2024
Is Bitcoin's Bull Run Losing Steam? On-Chain Indicator Signals Warning
Bitcoin Halving

Is Bitcoin’s Bull Run Losing Steam? On-Chain Indicator Signals Warning

Bitcoin OGs appear to be preparing to capitalize on their gains ahead of the upcoming Bitcoin halving, as indicated by a leading market indicator that has spiked above 4.0. This surge in the Value Days Destroyed (VDD) Multiple has led crypto commentators to speculate about a potential end to the current bull run.

Indicator Signals Market Shift

The VDD Multiple, a metric designed to identify instances where Bitcoin’s price may be overheating and nearing its peak during major market cycles, has caught the attention of traders and analysts alike. A higher reading on this indicator suggests a significant influx of Bitcoin into the market, often signaling an inclination towards selling.

“Has on-chain momentum topped?” questioned pseudonymous trader TXMC Trades in a recent post to their 83,200 followers, highlighting growing concerns among investors.

Current Status of the Indicator

As per GlassNode data, the VDD Multiple currently stands at 3.03, having briefly surged to 4.21 on March 28. This doubling since the beginning of the year, when the VDD Multiple hovered around 2.04 on January 1, raises eyebrows among market observers.

Source: Glassnode

The last time the VDD Multiple surpassed 4 was in January 2021 when Bitcoin’s price was $40,257. However, despite this previous peak, the subsequent cooldown did not result in a market downturn. Bitcoin’s price surged by 52.2% to $61,283 just two months later, according to CoinMarketCap data.

Approaching Bitcoin Halving

With just nine days left until the Bitcoin halving, the current levels of the VDD Multiple exceed those observed before past halving events. For instance, during the same timeframe preceding the last halving on July 9, 2016, the VDD Multiple stood at 0.419. It reached 1.606 ten days before the 2020 Bitcoin halving.

Contributing Factors

A senior researcher at Glassnode, known as CryptoVizArt, attributes the soaring VDD Multiple levels to substantial outflows from Grayscale’s Bitcoin Trust (GBTC). Since the approval of spot Bitcoin exchange-traded funds (ETFs) for trading by the United States Securities and Exchange Commission on January 10, GBTC has shed a total of $15.96 billion in assets, according to Farside data. The fund’s high fees relative to other Bitcoin ETFs have been cited as contributing factors to these elevated outflows.

Bitcoin’s Price Movement

Despite these developments, Bitcoin has surged by 56% since the beginning of the year, climbing from $44,172 to its current price of $69,260 at the time of publication. As Bitcoin continues to navigate through these indicators and market dynamics, traders and investors remain vigilant for potential shifts in momentum and market sentiment.

Image by freepik

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