Lesser-Known Bitcoin Indicator Signals Onset of Major Bull Run

The "reserve-risk" indicator has been historically reliable.

AccessTimeIconApr 18, 2023 at 9:26 a.m. UTC
Updated Apr 18, 2023 at 7:41 p.m. UTC

A lesser-known but historically reliable bitcoin price indicator has flipped positive, signaling the onset of a major bull market.

Bitcoin's (BTC) reserve-risk multiple has crossed above zero, turning positive for the first time since October 2021, according to blockchain analytics firm Glassnode.

The previous crossovers above zero paved the way for parabolic price rallies. "In 2012, 2013, 2015, 2019 and 2020, it resulted in gains of 2,830%, 566%, 6,400%, 99% and 487%, respectively," on-chain analyst Ali Martinez tweeted Monday.

Glassnode defines reserve risk as a long-term cyclical indicator, comparing the incentive to sell at the going market price with long-term holders resisting the temptation to liquidate. A lower reading indicates strong conviction among "HODLers" – slang for long-term crypto investors – and vice versa.

The reserve-risk multiple is calculated by dividing the daily indicator value by its 365-day moving average.

Previous crossovers above zero with the reserve-risk multiple paved the way for sharp price rallies. (Glassnode, Ali Martinez)
Previous crossovers above zero with the reserve-risk multiple paved the way for sharp price rallies. (Glassnode, Ali Martinez)

The reserve-risk multiple's previous crossovers above and below zero accurately predicted major bullish and bearish trends.

If history is a guide, the latest positive crossover means the cryptocurrency's 80% year-to-date rally to 10-month highs above $30,000 may be only the first milestone in its upward journey.

The bullish implication is consistent with bitcoin's tendency to chalk up outsized rallies in the months leading up to the mining reward halving. This programmed code reduces the pace of the cryptocurrency's supply expansion by 50% every four years. Bitcoin's fourth reward halving is due in April next year.

Edited by Sandali Handagama.


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.