After being trapped between $31,500 and $29,500 for more than a month now, Bitcoin broke below the price range due to a lack of positive stimuli. Higher timeframe on-chain metrics, however, continue to signal a bull market.

In fact, the latest edition of Bitfinex Alpha said that we could still be in the early part of a bull market.

Onset of New Bull Market

According to the report, despite the downturn, Bitcoin’s current market price is above its realized one of $20,361. This essentially means that market participants are in profit, who are likely to hold their positions as, on aggregate, longer-term holders have been in profit since the beginning of the year, Bitfinex explained.

When Bitcoin reclaims its position above the Realized Price after an extended period of staying below it, this usually signals the onset of a new bull market. The report added that this correlation between the flagship crypto asset’s price rebound and the initiation of a bull market is a “noteworthy trend” in its historical performance.

The creation of new Bitcoin wallets can be observed as the 30-Day Simple Moving Average (SMA) surpassed its 365-Day SMA in November. Such an uptick in wallet creation typically coincides with or precedes the beginning of bull markets, indicating a potential positive price movement for the crypto shortly.

The Bitcoin market realizing more profits than losses further indicates a favorable market condition for sellers. This is yet another sign strengthening the bullish thesis.

Derivatives Market Continues to Dominate Scene

The latest price movement induced a slight increase in volatility, but there has been no significant change in the order flow and options behavior from buyers and sellers.

Bitfinex Alpha report observed that not only did the price break down from the defined trading range, but an attempt to break back inside it was also rejected on July 26th. It further added that technical traders may see this as a bearish sign. However, there’s more to the story.

The long-term fundamentals, too, remain unchanged, as the behavior of the derivatives market suggested minimal variation. Following Bitcoin’s immediate breakdown from the range, open interest surged by 7.5% to new local highs. Funding, on the other hand, remained positive favoring shorts.

The non-violent nature of the downward range break resulted in significantly fewer liquidations compared to typical liquidation cascades seen with Bitcoin or previous breaches of range extremities within this range.

Furthermore, a negative Cumulative Volume Delta (CVD) during the on-ramp indicated more action from sellers amidst low demand. Such a trend indicated low volatility in Bitcoin’s price where buyer/seller sentiment hasn’t changed while the price continues to be increasingly dominated by the derivatives market.