Bitcoin appears to be entering a new “speculation cycle,” characteristic of a bull run, according to a recent analysis by Philip Swift, creator of data resource LookIntoBitcoin and co-founder of trading suite Decentrader.
Swift pointed to the behavior of the RHODL Ratio metric as evidence of history repeating itself.
1/ When I created the #bitcoin RHODL Ratio indicator in 2020, one thing that struck me was how it showed a new bull run forming…when the ratio value of younger coins began to increase.
Which is where we are right now
Don't panic about small price pullbacks. Zoom out. pic.twitter.com/1qEmLYQOLf
— Philip Swift (@PositiveCrypto) May 16, 2023
The RHODL Ratio, a metric developed by Swift in 2020, tracks Bitcoin‘s price behavior based on the realized price of its supply—the price at which coins last moved.
By comparing the relative ages of coins that moved one week ago to those that moved 1-2 years ago, the ratio offers insights into the activity of short-term and long-term holders, and the extent of market speculation.
Currently, the RHODL Ratio is bouncing higher, having hit its green accumulation zone at the end of 2022. Swift believes that the uptick in speculative activity signals a new bull cycle is already underway. He encourages investors not to worry about minor price pullbacks, advising them to “zoom out.”
Despite a blow-off top for BTC/USD in the 2021 bull market, the RHODL Ratio did not see a similar move. The last time the metric reached its red “high speculation” zone was during Bitcoin’s previous all-time high in late 2017.
On shorter timeframes, Swift observed that market participants remain risk-averse on crypto markets, with various bearish ratings for Bitcoin generated by Decentrader. The current market sentiment appears to be one of fear, depression, and disinterest.
Swift warned that while there is cause for optimism, it’s essential to be prepared for all eventualities, including a possible return to $20,000 in the final year leading up to Bitcoin’s next block subsidy halving.
