Is The Bitcoin Bear Market Over?

The being in 2022 that bothered Bitcoin (BTC -0.00%) seems to have been forgotten as the leading cryptocurrency has climbed more than 65% since the start of the new year. Thanks to this rally, optimists are hopeful that this renewed momentum could be enough to officially call for an end to the bear market that saw Bitcoin lose nearly 70% of its value.

To truly assess whether Bitcoin has put the last crypto winter in the rearview mirror, investors need to look at some metrics other than just price to accurately gauge the likelihood of a bull market on the horizon.

While the purpose of Bitcoin as an investment remains ambiguous, likely due to the variety of roles it is capable of playing, at its core it is a decentralized payment network. Therefore, by measuring activity on the network in terms of user addresses and transactions, investors can gain insight into the health of Bitcoin today relative to other bear and bull market cycles.

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What the network says

To start, let’s look at the addresses. Rather than the total number of addresses, which is constantly growing, the rate at which new addresses join the network may be more telling.

After reaching some of the lowest levels since early 2020, there has been a resurgence in the number of new addresses transacting on the network. Over the past quarter, an average of more than 13.5 million new addresses were added to the blockchain per month, according to Glassnode, a crypto research and data firm. The last time the levels were this high was back in the first quarter of 2021 when Bitcoin went on a run that ended up at just $63,000. In fact, this March recorded the largest increase in addresses since April 2021 with a whopping 14.4 million new users.

With a near record amount of new addresses using the network, it would be plausible to assume that transactions are also at cycle highs – and that assumption would be correct.

In the 1st quarter of this year, Bitcoin averaged just 9 million transactions per month as demand for the cryptocurrency increased. Like the growth of new addresses, you have to go back to Q1 2021 when Bitcoin was comfortably in the middle of a bull market to find transactions at these levels.

Not quite there yet

With address growth and an increase in transactions, Bitcoin has seen its prices rise significantly since the beginning of 2023. From January to March, Bitcoin rose 72%. Following the recurring theme of address growth and number of transactions, this was the best performance over a quarterly period since Q1 2021, when it soared 103%.

Considering the combination of all these metrics, it may be enough to call for an end to Bitcoin’s bear market blues. However, optimism that a bull market like the one in 2021 will return this year may be misplaced.

Rather, Bitcoin currently appears to be in no man’s land, straddling the edges of the previous bear market and its potential next stage in an upcoming bull market. But while it remains in this territory, the world’s most valuable cryptocurrency still appears to be a bargain. Considering that it remains more than 50% below its all-time high, and yet key metrics are close to levels last seen when Bitcoin’s price was worth more than $60,000, buying the cryptocurrency today could prove lucrative if a bull market should return.