Bitcoin's long-term metrics are similar to early phases of previous bull markets: Bitfinex

Bitcoin's long-term metrics are similar to early phases of previous bull markets: Bitfinex

As speculators minted BRC-20 tokens in droves via text inscriptions, the Bitcoin blockspace experienced an explosion in demand in recent weeks.

This dramatic change in network activity caused transaction fees to rise to levels not seen in the last two years.

Signs of overload

A new report published by Bitfinex noted that the introduction of BRC-20 and Bitcoin-based smart contracts transforms the blockchain from its traditional reputation as a “simple digital currency ledger” to a “more dynamic, smart contract-enabled chain.”

Data suggests that BRC-20 tokens accounted for more than 60% of all transaction activity on the Bitcoin blockchain last week and accounted for almost 43% of all fees.

However, the rapid popularity of BRC-20 and the subsequent increase in fees have weighed on other metrics. Active and new addresses interacting with the network are nearing two-year and annual lows, respectively. Such a trend could potentially indicate that higher transaction fees are likely to deter new and existing Bitcoin network users.

The report added that while higher transaction fees have likely prevented new Bitcoin addresses from increasing, they have improved the health of the network. The brief surge in mining revenue was certainly a welcome relief for network miners after the brutal bear market of 2022. So much so that on May 8, Bitcoin miners earned a total of $17.75 million in revenue.

Long-Term Bitcoin Metrics

In the short term, last week's events, including Binance's recent double halt on Bitcoin withdrawals, appear to be negatively impacting sentiment on flagship crypto assets. Therefore, the short-term metrics still suggest a possible decline in Bitcoin price.

However, when zooming out, the long-term on-chain indicators appeared more favorable and resembled the early stages of previous bull markets. It was observed that a strong bullish sign for the market was that Bitcoin was trading well above its 200-day moving average as well as its realized price.

Another positive sign was the Bitcoin Realized HODL Multiple, which has been on an upward trend over the past 90 days. This essentially suggests that USD denominated assets are moving back towards new demand inflows. In such a case, “the market is capable of absorbing gains even if they are realized.”

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