Bitcoin (CRYTPO:BTC) is showing strong upward momentum, with recent on-chain data suggesting the cryptocurrency could continue to rise.
A report from CryptoQuant analyst Avocado highlights several key on-chain support metrics that signal a potential long-term rally for Bitcoin.
Avocado's analysis points to the seven-day Simple Moving Average (SMA) of Bitcoin's Fund Flow Ratio as one of the major indicators of positive sentiment.
The ratio has dropped to 0.05, a critical support level where investor activity on exchanges has historically rebounded.
This level has often marked the end of bear markets or the onset of bull phases, leading to sustained price rallies.
Another key metric identified by Avocado is the 30-day SMA of Bitcoin's Estimated Leverage Ratio.
Currently, the ratio is showing signs of recovery within a support range of 0.15 to 0.175, indicating growing investor confidence.
"With the approval of futures ETFs and the recent developments in Bitcoin options trading, this metric’s influence will likely continue to grow," Avocado noted.
Additionally, the 30-day Exponential Moving Average (EMA) of Bitcoin's Binary Coin Days Destroyed (CDD) reveals that long-term holders are accumulating BTC, further supporting the idea of a prolonged bull market.
The CDD metric, which is currently ranging between 0.1 and 0.3, tends to indicate a bullish trend when long-term holders increase their activity.
Bitcoin has surged 7.5% over the past week, fueled by the Federal Reserve's decision to reduce interest rates by 50 basis points.
This move has increased liquidity in the U.S. markets and driven activity in Bitcoin’s futures and perpetual markets, pushing the cryptocurrency's value higher.
At the time of writing, the Bitcoin price was $64,401.39.