Will Bitcoin repeat history? On-chain data suggests a breakout Q4: CryptoQuant

Historical data shows that bitcoin (BTC) performed well in the fourth quarters of previous bull cycles, especially in the middle years. Current chain data indicates that the leading cryptocurrency is following past patterns and on track for another remarkable fourth quarter.

A report by market analysis platform CryptoQuant revealed that bitcoin’s price rally in the coming weeks could be sustainable as demand for the asset is recovering and growing at the fastest monthly rate since April.

Bitcoin in positive seasonal performance

During bitcoin’s seasonal performance over the years in the middle of 2012, 2016, and 2020, the cryptocurrency rose 9%, 59%, and 171%, respectively, in the fourth quarter. CryptoQuant analysts found that BTC is behaving very similar to the patterns seen in 2016 and 2020.

This positive performance is driven by increased apparent demand for BTC, which posted a monthly growth of 177,000 BTC last week, its biggest reading since April. Apparent demand refers to the difference between the production of BTC (mining emission) and changes in its inventory (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 increase in this metric preceded a more than 5% increase 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.

The demand is growing

In addition, the increase in demand for BTC can be seen in the increase in purchases of Bitcoin exchange-traded funds (ETFs) in the United States. These products have been net buying approximately 8,000 BTC recently, their highest daily purchase since July 21st.

Big bitcoin investors (whales) are also expanding their holdings, with their balances growing by 670,000 BTC per year. Additionally, the growth in whaling is above its 365-day moving average, which is considered a positive sign for prices.

CryptoQuant says that the expansion of apparent demand for bitcoin is necessary for BTC to rise sustainably to all-time highs. Historical data shows how positive and growing apparent demand led to BTC price rallies in 2020-2021 and earlier this year. Apparent demand in these cases peaked at 490,000-550,000 BTC; however, current demand stands at 177,000 BTC. So there is more room for growth.

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