Here’s What’s Different This Time

Bitcoin (BTC) has climbed back to $44,000 for the first time in 19 months – nearly three years since first reaching that value in February 2021.

That doesn’t mean the asset is stagnant, however: on-chain analysis finds that much has changed about the nature of the crypto market, painting a much more bullish outlook this time around.

Bitcoin at $44k: Then VS Now

According to leading Glassnode analyst James Check, $44,000 marked the “absolute zenith of on-chain mania” back in January 2021.

The growing hype was visible by observing Bitcoin’s “Value Days Destroyed” Multiple – a Glassnode metric for detecting whether overheated or undervalued Bitcoin markets.

A higher multiple indicated that long-term investors are finally realizing profits on old, once-dormant coins. Spending of these older coins quickly overpowers demand, “ending euphoric bull runs” according to Glassnode.

In January 2021, Bitcoin’s Value Days Destroyed multiple tapped an all-time high of roughly 4.25. As of Tuesday, however, the multiple remained at a modest 1.52 – and hasn’t come close to its previous record for years.

“Here we are at $44k, and barely a squeak,” wrote Check in an X post on Tuesday. “HODLers are not relinquishing their coins. They demand higher prices.”

Reflexivity Research co-founder Will Clemente echoed the same sentiment, noting that Bitcoin is “far from overvalued based on historic readings.”

He cited Bitcoin’s MVRV ratio – another on-chain metric comparing Bitcoin’s market cap to its on-chain realized cap. The latter measures the total value of all coins based on the last time they were moved, giving a rough idea of each coin’s cost basis.

A high ratio suggests that investors are in major profit and likely to cash out soon. The ratio was at 3.81 back in January 2021, versus a more modest 2.07 this week.

Is the Market Overheated?

Nevertheless, Glassnode’s Check notes reason for caution: In a separate post that day, the analyst said he’d be “surprised if Bitcoin didn’t consolidate / correct near term.”

Bitcoin’s rise to $44,000 marks a 16% rise over the past seven days. According to Check, it’s also a major deviation from Bitcoin’s True Mean Market Price, which measures the average price at which investors acquired their current coins. As of Tuesday, that price is $31,231 – roughly 40% under the market price.

Check agreed with a commenter that it would be “healthy” for Bitcoin to consolidate close to $42,000 until the halving.

“A few months rest would allow investor cost bases to re-acclimate above the True Market Mean Price,” he said.

Bitfinex analysts recommended similar caution in their Alpha report this week, claiming a correction to $29,000 is in the realm of possibility.