Emerging strongly from its bear market lows, Bitcoin has reasserted itself as one of the best-performing assets of the year. Outpacing its counterparts in traditional financial markets, Bitcoin’s stellar performance has been propelled by several pivotal developments. Chief among them was the historic launch of the Bitcoin ETFs in January, a new administration signaling support for the crypto industry in the U.S., and a shift in the Federal Reserve’s monetary policy toward an easing cycle.

The Bitcoin ETFs marked a groundbreaking moment, becoming the most successful ETF launches in history, collectively surpassing $100 billion in assets under management within their first year. This monumental inflow of capital helped drive Bitcoin’s remarkable year-to-date return of +126%, significantly outpacing the S&P 500 (+26%), NASDAQ (+33%), and gold (+28%).

While Bitcoin’s short-term volatility often draws attention, its long-term growth trajectory remains robust. At its core, Bitcoin’s price is determined by the interplay of supply and demand, a dynamic that is uniquely transparent thanks to the public nature of its blockchain. This treasure trove of data offers investors valuable insights into potential price movements.

As we step into 2025, here are five key indicators investors can use to navigate the bull market.

1) Exchange Balances / Exchange Net Flows

Centralized exchanges are the epicenters of Bitcoin trading activity, where the majority of trading volume occurs. Active traders and speculators typically store their Bitcoin on exchanges to capitalize on rapid price movements and execute trades quickly.

Currently, approximately 2.5 million Bitcoin, or about 12.6% of the circulating supply, are held on centralized exchanges. This marks a 17% decline since the beginning of the year, when around 3 million coins were stored on these platforms.

This reduction in exchange balances reflects a growing trend of holders withdrawing their Bitcoin, potentially for long-term storage in private wallets, signaling increased confidence in Bitcoin’s long-term value or concerns about centralized exchange risks.

Historically, as market euphoria builds and prices surge toward a cycle peak, the number of coins on exchanges tends to increase. This occurs as holders transfer their Bitcoin to exchanges to take advantage of high prices and lock in profits. Therefore, rising exchange balances can serve as a signal of heightened selling pressure and market exuberance, often preceding a potential price correction. Conversely, declining exchange balances may indicate reduced selling interest and a more bullish market sentiment.

As market euphoria reaches its fever pitch, we should expect the number of coins on exchanges to rise, as holders rush to sell their coins at higher prices. Watch for the current downwards trend to reverse, which may indicate the bull run is losing steam.

2) MVRV Z-score

The MVRV Z-Score is a powerful on-chain valuation tool that helps investors identify periods when the market may be at an extreme, either overvalued or undervalued level. It compares Bitcoin’s market value—calculated by multiplying the current price by the total circulating supply—to its realized value, which represents the average price of Bitcoin at the time it was last moved between wallets.

By factoring out short-term price fluctuations, realized value offers a clearer view of Bitcoin’s “fair” long-term valuation. The Z-Score then uses statistical analysis to highlight significant deviations between these two metrics. When the Z-Score rises into the pink zone, it indicates that Bitcoin is likely overvalued, often signaling market cycle tops. Historically, it has accurately flagged these peaks within two weeks, making it a reliable tool for identifying potential sell opportunities.

Conversely, when the Z-Score drops into the green zone, it shows that Bitcoin is undervalued relative to its realized value, signaling strong buy opportunities with historically high returns. Compared to the broader MVRV Ratio, which tracks general trends, the MVRV Z-Score is more precise in pinpointing market tops and bottoms, making it an essential indicator for timing investments in Bitcoin’s volatile cycles.

At the time of writing, the MVRV Z-Score is under 3, which suggests Bitcoin has plenty of room to run before becoming overheated. Historically, a Z-Score above 6 indicates when investors should pay attention and may want to start reducing exposure. In previous cycles, Z-Scores above 7 coincided with the market cycle top.

3) 1+ Year HODL Wave

The 1+ Year HODL Wave is a useful on-chain analysis tool that examines the age distribution of Bitcoin holdings to assess market sentiment and trends. The indicator categorizes Bitcoin by the time elapsed since it was last moved between wallets. Specifically, the “1+ Year HODL Wave” tracks the percentage of Bitcoin that has remained untouched in wallets for at least one year.

The 1+ Year HODL Wave is particularly useful for identifying market cycle highs and lows, as it reflects the psychology of long-term holders. When Bitcoin’s price climbs toward a cycle high, the percentage of 1-year+ HODL coins typically declines.

This trend occurs because long-term holders begin selling their coins to take profits, effectively removing them from the “1+ year” category. During bearish phases or market lows, the percentage of long-term held coins tends to increase, as holders refrain from selling amid subdued market activity.

Investors can use the 1+ Year HODL Wave as a predictive tool by observing shifts in long-term holder behavior. Historically, a sharp decrease in the percentage of 1-year+ coins often signals that Bitcoin is approaching a significant price peak, driven by profit-taking from seasoned holders.

A growing proportion of long-term held coins can indicate accumulation phases, where confidence in Bitcoin’s future prospects is high among holders. The current trend indicates long-term holders have begun moving coins, however, previous cycles suggest we should see more activity and a greater decline in the percentage before the cycle tops.

4) Terminal Price

The Terminal Price indicator is a sophisticated on-chain metric used to estimate potential price peaks in Bitcoin’s market cycles. It builds on the concept of Transferred Price, which itself is derived from Coin Days Destroyed (CDD).

CDD is a measure of the economic activity of Bitcoin based on its holding duration. It calculates the product of the number of coins in a transaction and the number of days they were held before being moved. For example, if 10 BTC were held for 100 days and then transacted, this movement represents 1,000 coin days destroyed. High CDD values typically indicate that long-held coins are being moved, often coinciding with major market events such as price rallies or corrections.

To calculate Terminal Price, the process begins with the Transferred Price, which averages CDD across Bitcoin’s circulating supply and the time it has been in existence. Transferred Price thus encapsulates Bitcoin’s long-term economic activity and holder behavior. To derive the Terminal Price, the Transferred Price is multiplied by 21, accounting for the fact that Bitcoin’s supply is capped at 21 million. This adjustment creates a “terminal value,” effectively normalizing past economic activity across Bitcoin’s fixed maximum supply.

Historically, the Terminal Price has proven to be a reliable predictor of Bitcoin’s price cycle tops. When Bitcoin’s market price approaches or exceeds the Terminal Price, it often signals that the market is overheated and a correction may follow. This makes the indicator particularly valuable for identifying potential exit points during bull markets.

The current Terminal Price calculation is $188,000 which is rising every day as Bitcoin’s price rises. Assuming the bull market trend continues, the current cycle should peak above $200,000, if this cycle plays out similar to previous ones.

5) Google Search Trends

While not an on-chain metric, Google Trends provides valuable insight into retail sentiment and public interest in Bitcoin. Increased search activity typically reflects heightened enthusiasm and hype, often coinciding with significant price movements or market milestones.

Despite Bitcoin recently reaching the $100,000 milestone, Google search activity remains surprisingly subdued. The current trend value is 38, a stark contrast to its peak value of 100 during Bitcoin’s previous cycle high above $60,000 in 2021. This muted response suggests that retail investors have yet to display the widespread euphoria and exuberance typically seen at market cycle peaks.

As Bitcoin continues to set new all-time highs in this cycle, we can anticipate a corresponding rise in Google search activity. This metric is an important signal of growing retail engagement, often marking the later stages of a bull market when public interest reaches its zenith.

In conclusion, Bitcoin’s resurgence as a top-performing asset in 2024 underscores its resilience and growing acceptance in the global financial landscape. With the historic launch of Bitcoin ETFs, supportive regulatory signals, and an easing monetary policy from the Federal Reserve, the foundation for this bull market has been firmly established. However, as with any market cycle, navigating the road ahead requires a keen understanding of the key indicators shaping Bitcoin’s price trajectory.

On-chain metrics like exchange balances, MVRV Z-Score, 1+ Year HODL Wave, and Terminal Price are not a crystal ball, yet they offer invaluable insights into market sentiment, valuation extremes, and potential cycle peaks. Coupled with external signals such as Google Search Trends, these tools empower investors to make informed decisions, balancing the opportunities of a bull market with its inherent risks.

As Bitcoin marches toward new all-time highs, disciplined analysis and strategic planning will be paramount. Whether you’re a seasoned investor or a newcomer, staying attuned to these indicators will help you capitalize on opportunities while managing risks effectively.