Bitcoin investors have reason to be optimistic as five key on-chain indicators suggest that the current bull run is merely at its inception, despite the cryptocurrency market consolidating sideways over the past three months.

Since late February, the total market capitalization of cryptocurrencies has hovered around $2.5 trillion, leading to mixed opinions among market observers about whether the current cycle is nearing its end or just beginning. However, several on-chain metrics point towards the latter, according to analyst "ELI5 of TLDR," who highlighted these indicators in a May 19 post on social media platform X.

Key On-Chain Indicators Pointing to a Bullish Outlook

1. Bitcoin Market Dominance:
Historically, crypto bull markets commence with a high level of Bitcoin dominance, indicating that traders are primarily focused on Bitcoin rather than altcoins. Currently, Bitcoin's dominance stands at just over 56%, having remained above 50% since October 2023, according to TradingView. This high dominance suggests that the market is still in the early stages of the bull cycle.

2. MVRV Z-Score:
The Market Value to Realized Value (MVRV) Z-score is a key indicator that compares Bitcoin’s current market value to its historical average value. Typically, this score peaks around six during market cycle tops. Presently, the MVRV Z-score is less than three and has not surpassed six since March 2021, suggesting ample room for further growth.

3. Puell Multiple:
This metric is derived by dividing the daily value of Bitcoin mined by its yearly moving average. Historically, cycle peaks are marked by a Puell multiple above three. Currently, the multiple is below one, having dropped after the April 20 halving event. The highest it reached during the 2024 price surge was 2.4, indicating that the peak is likely still ahead.

4. Hodl Waves:
Charts showing how much Bitcoin is held by different cohorts based on holding periods, known as hodl waves, also support a bullish outlook. The Realized Cap Hodl Waves, which give a macro view of Bitcoin held by recent buyers versus long-term holders, suggest that selling pressure is diminishing. A decrease in the peaks of younger bands implies that the market may have more room to grow, as selling pressure from new investors has subsided.

5. Miner Revenue Per Hash:
The revenue miners earn per hash is another bullish indicator. Although this metric tends to decline over time with increasing network difficulty, spikes to $0.3 per terahash in the past have coincided with previous market cycle peaks. Current levels suggest that the market is not yet overheated.

Cautionary Indicators

While the overall outlook is positive, two on-chain metrics indicate that the market might be approaching a peak:

1. Realized Hodl (RHODL) Ratio:
This ratio compares the average price of recently purchased coins to those bought one to two years ago. A high ratio indicates that new buyers are paying significantly more than long-term holders, which can signal an overheated market. This metric suggested a market peak in March.

2. Cumulative Value-Days Destroyed (CVDD):
CVDD tracks the cumulative sum of value-time destruction as coins move from old to new hands, measured against the market age. A peak in this metric could indicate that many old coins are moving simultaneously, a potential sign of a market top.

Current Market Status

At the time of writing, Bitcoin is trading at $66,668, down 10% from its mid-March all-time high. Despite this recent dip, the combination of high Bitcoin dominance, a favorable MVRV Z-score, a low Puell multiple, positive hodl wave trends, and encouraging miner revenue per hash data collectively suggest that the bull market is just getting started. However, investors should remain vigilant of the RHODL ratio and CVDD to avoid potential market peaks.