A chart from the Delphi Digital report on the bitcoin price shows the similarities between today’s market and the previous cycle.
In terms of blockchain analysis, Delphi Digital focuses on the age distribution of unspent transaction outputs (UTXOs). This is effectively a measurement of how long users have been holding some bitcoin without moving it at all.
“Analyzing Bitcoin’s aggregate UTXO age distribution over time provides insight into the buying and selling patterns of previous market cycles. This allows us to forecast where we are in relation to prior cycles and what we can likely expect going forward,” says the report.
In their report, Delphi Digital compares the current age distribution of UTXOs to the state of the UTXO set at bottom of the previous market cycle.
“The 1 year+ holder rate during the potential December bottom is within 1% of the 1 year+ holder rate during the previous cycle’s bottom in January of 2015,” says the report.
More specifically, the report indicates the percentage of UTXOs that were at least one year old in January 2015 was 53.5%. This rate was at 53.9% in December 2018. Since then, the rate has grown to 61.6% as of April 23rd, but the rate of growth in this metric has also slowed as of late.
“This slowdown likely marks the end of the high growth period in the 1 year+ UTXO rate, which makes sense considering the pricing environment and the waning level of new interest we were seeing at this point last year,” says the report.
Delphi Digital’s report also points out that there has been growth in other, older UTXO age groups.
In terms of macro trends, the report notes bitcoin has been the best performing asset so far this year. Additionally, the report points to the potential benefits of low growth expectations in the greater economy for the bitcoin price.
“Slowing global growth expectations but modest economic output provides a favorable backdrop for bitcoin as investors seek out above-average growth opportunities,” says the report.
If this is truly the end of bitcoin’s bear market, then perhaps ether should also be watched closely. A previous report from Delphi Digital indicated that ether could outperform bitcoin once the bull market in bitcoin returns — at least over the short term.
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