Will Bitcoin Repeat History? On-Chain Data Suggests Q4 Breakout: CryptoQuant

Historical data shows bitcoin (BTC) performed well in the fourth quarter of previous bull cycles, especially in halving years. Current on-chain data shows that the leading cryptocurrency is following its previous pattern and is on track for a great Q4.

A report from market analysis platform CryptoQuant revealed that bitcoin’s price rise in the coming weeks could be sustainable as demand for the asset recovers and grows at its fastest monthly pace since April.

Bitcoin in Positive Seasonal Performance

During bitcoin’s seasonal performance in the halving years of 2012, 2016, and 2020, the cryptocurrency increased by 9%, 59%, and 171% respectively in the fourth quarter. CryptoQuant analysts found that BTC behaved very similarly to the patterns seen in 2016 and 2020.

This positive performance was driven by a surge in BTC demand, which recorded monthly growth of 177,000 BTC last week, the largest figure since April. Real demand refers to the difference between BTC production (mining issuance) and its inventory change (inactive supply for more than a year). This metric reached 496,000 BTC in early April, shortly after BTC rallied above $72,000 in March.

The surge in this metric preceded a rise of more than 5% in the price of BTC. The cryptocurrency hit a ten-week high of $68,100 earlier this week and was changing hands at $67,900 at the time of writing.

Demand Increases

Additionally, the increase in demand for BTC can be seen from the increase in purchases of United States spot Bitcoin exchange-traded funds (ETFs). These products have net purchases of around 8,000 BTC recently, the highest daily purchases since July 21.

Large bitcoin investors (whales) are also expanding their holdings, with their balances growing by 670,000 BTC annually. Additionally, the growth in whale holdings is above the 365-day moving average, which is considered a positive sign for the price.

CryptoQuant says expanding bitcoin demand is necessary for BTC to sustainably surge to record highs. Historical data shows how positive and ever-increasing demand led to BTC price increases in 2020-2021 and the start of this year. Real demand in that case peaked at 490,000-550,000 BTC; however, demand currently stands at 177,000 BTC. Hence, there is more room for growth.