Bitcoin's Bull Run Momentum - Is It Over or Just Getting Started?

An on-chain indicator called the Value Days Destroyed (VDD) Multiple has recently spiked above 4.0, leading some crypto analysts to speculate that Bitcoin's bull run momentum may be waning.

The VDD Multiple measures the rate at which older coins are being spent, with a higher reading indicating more long-term held coins hitting the market, likely to be sold.

The last time the VDD Multiple went above 4 was in January 2021, before Bitcoin's price surged over 50% in the following two months. However, this recent spike has traders wondering if this signals the peak of the current market cycle.

Grayscale Outflows Driving the Spike

According to a senior researcher at Glassnode, the elevated VDD Multiple levels are being driven by substantial outflows from Grayscale's Bitcoin Trust (GBTC) following the approval of spot Bitcoin ETFs in January.

With more competitively priced options now available, investors have been redeeming their GBTC shares, putting selling pressure on Bitcoin.

Bull Run Start Signal?

While some see the high VDD Multiple as a potential sell signal, one closely followed analyst, PlanB, views it differently.

PlanB is patiently waiting for Bitcoin to cross above its two-year realized price around $29,500 - a key resistance level that has historically marked the start of new bull runs.

The realized price tracks the average price at which every Bitcoin was last moved. When the market price trades above this level, it indicates most investors are in profit and a bull run may be underway.

PlanB notes this pattern of breaking above the realized prices "always" signals a new bull market start.

Is This Time Different?

Of course, past patterns don't guarantee future results, and this cycle could play out differently.

The current dynamics like the Grayscale situation are unique. However, with Bitcoin up over 50% year-to-date and continuing to grind higher, many analysts still see the long-term trend as bullish.

The key levels to watch appear to be the $29,500 two-year realized price as a bull run confirmation signal, and whether the VDD Multiple spike is a brief volatile blip or the start of a more sustained distribution of long-term held coins hitting the market.

The next few weeks could be telling for Bitcoin's near-term trajectory.