Six on-chain metrics that suggest Bitcoin is a ‘generational buying opportunity’

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Several on-chain stats from the Bitcoin (BTC) network are flashy buy signals after this year’s rally.

Bitcoin has broken out of its stupor and has posted a 37% gain since early 2023. However, on-chain data still indicates it could be a “generational buying opportunity” according to analysts.

On Jan. 24, “Game of Trades” researcher and technical analyst identified six on-chain metrics for its 71,000 Twitter followers.

The first metric is an accumulation trend score that highlights zones of heavy accumulation in terms of entity size and the number of coins purchased.

“Large entities have been in deep accumulation mode since the collapse of the FTX,” the analyst noted before adding “similar accumulation occurred in the bottoms of 2018 and 2020.”

Bitcoin’s entity-adjusted resting current is a measure of the ratio of current market cap to annualized resting value.

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Whenever the resting value exceeds the market cap, the market can be considered a full capitulation, which has been a good historical buying zone.

According to Glassnode, in 2022, this metric dropped to its lowest level ever.

BTC entity corrected quiescent current. Image: Glassnode

Bitcoin’s reserve risk can be used to gauge long-term holders’ confidence in the price of BTC. This also fell to an all-time low by the end of 2022, according to Glassnode data.

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Bitcoin Realized Price (RP) is the value of all coins in circulation at the price they last moved, 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 the collapse of the FTX until January 13. It is currently just above the RP, representing a new buying opportunity.

The Bitcoin MVRV Z Score shows when BTC is significantly over or undervalued relative to its “fair value” or realized price. When the statistic exits the extremely undervalued zone, it is often considered the end of the bear market.

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BTC’s MVRV Z Score. Image: Glassnode

Finally, there is the Puell Multiple which examines the fundamentals of mining profitability and its impact on market cycles.

Lower readings, as they are at the moment, indicate miner stress and represent long-term buying opportunities.

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The analyst concluded that these six on-chain metrics “point to an exceptional risk-reward setup in Bitcoin.”

The stats are all at similar levels to the market cycle bottoms in 2015, 2018 and 2020, they added.

BTC is currently trading up more than 1.9% in the past 24 hours to $22,675, according to TSTIME data.