These 5 indicators will determine the rally: Be sure to follow!

According to an analyst, although the crypto market has been moving sideways for the past three months, at least five onchain data indicate that the bull market may be just beginning.

Since the end of February, the market value of cryptocurrencies has been hovering around $2.5 trillion. Market observers are undecided whether the cycle has already ended or not. According to an article shared by Analyst ELI5 of TLDR on May 19th, these five on-chain data points indicate that a bull market is on its way.

Bitcoin dominance is above 56%.

Cyclically, crypto bull markets start with the dominance of Bitcoin and most traders sell their altcoins during the previous bear market cycle.

On the other hand, when BTC dominance decreases and the altcoin bull starts, it indicates the next stage of the cycle. However, the situation does not seem to be like this yet. According to TradingView, Bitcoin dominance is just above 56%. Bitcoin's market share has been above 50% since October 2023.

Critical data for the Bitcoin summit

According to LookIntoBitcoin charts, the Bitcoin MVRV Z-Score compares the asset's current market value or capitalization with its historical average value and typically reaches its peak at around 6 during cycle tops.

According to LookIntoBitcoin, currently it is less than half of this and has not exceeded 6 since March 2021.

The number of mined Bitcoins is becoming increasingly important.

Puell Multiple is another metric that is in line with cycle peaks and has not yet done so. This indicator is calculated by dividing the daily value of mined Bitcoin by its annual moving average. According to Coinglass, Puell Multiple fell below 1 after the halving on April 20th. Peaks above 3 usually correspond to cycle peaks and only reached 2.4 during the price pump in mid-March 2024.

The movements of diamond hands are important

According to LookIntoBitcoin, charts that show how much BTC is held by diamond hands, also known as HODL investors, can also give a bullish signal for Bitcoin.

Realized Cap HODL Waves provides a macro view of how much Bitcoin is held by recent buyers compared to some time ago. The decline in peaks in younger bands indicates that selling pressure has exhausted and there could be room for further upside.

Miner revenues will be determining.

The fifth upward factor from on-chain data is the miner revenue per hash, which shows how much money miners earn for transactions. Although the hash rate tends to decrease from time to time, ELI5 indicated that the last two increases came at $0.3 per terahash per second during previous market cycle peaks.

On the other hand, there are several on-chain data that suggest the markets may have become overheated and reached their peak. The RHODL (Realized HODL) ratio compares the average price of recently purchased coins with the average price of coins purchased 1-2 years ago.

If new buyers are paying much more than long-term holders for BTC, as this metric indicates in March, it could suggest that the market has reached its peak.

Cumulative Value Destroyed Days (CVDD) metric also seems to have peaked. This metric records the cumulative total of the value-time equation as a proportion of market age when coins move from old hands to new hands.

ELI5, "If a large number of old coins start moving at the same time, it could be a sign that this market is reaching its peak," he said.

This article does not contain investment advice or recommendations. Every investment and trading activity carries risks, and readers should conduct their own research when making decisions.