Su Zhu, co-founder and CEO of hedge fund Crypto Three Arrows Capital, says that Bitcoin just launched a rare bullish signal.
Zhu points out to his 447,000 followers on Twitter that Bitcoin’s idle flow meter has just reached a level it has only ever seen five other times in history.
“Idle Flow buy signal for BTC in USD, very rare, only six times in history.”
Idle flow indicates the average number of days each spent coin was idle before it was moved. The gauge can be used to time market lows and assess whether a bull market is still in relatively normal conditions.
Another on-chain measure of bitcoin that Zhou finds noteworthy is its illiquid supply. An illiquid supply refers to Bitcoin in wallets that have little to no sale history. When illiquid supply rises, this indicates that there is no selling pressure on Bitcoin and increases the chances of a rally.
“Illiquid supply has risen sharply since July 2021, in line with the accumulation trend from January 2019 to April 2021.”
According to Zhu, Bitcoin is in a prolonged accumulation period with an overall bull market structure.
“Bitcoin is in a multi-year process of higher highs and lower lows, with 2021 being a relatively calm year on the back of sideways accumulation.
Buying tops or selling bottoms can be very dangerous in this system, resulting in a significant underperformance of buy + hold.”
At the time of writing, Bitcoin is trading at $42,785, up 3.5% on the day, but still down nearly 40% from an all-time high above $69,000 in November 2021.
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Featured Image: Shutterstock/Sittipong Phokawattana