The woes of 2022 that plagued Bitcoin (BTC 0.75%) look to have been forgotten as the leading cryptocurrency has climbed more than 65% since the beginning of the new year. Thanks to this rally, optimists are hopeful that this renewed momentum might be enough to officially call for an end to the bear market that saw Bitcoin lose nearly 70% of its value.

To truly evaluate whether Bitcoin has put the latest crypto winter in the rearview mirror, investors need to look at some metrics other than just its price to accurately gauge the likelihood of a bull market on the horizon. 

While the purpose of Bitcoin as an investment remains ambiguous, likely due to the variety of roles it is able to play, at its core it is a decentralized payment network. Therefore, by measuring activity on the network in the form of user addresses and transactions, investors can get a glimpse into the health of Bitcoin today relative to other bear and bull market cycles. 

A bear in a field who appears to be eating a Bitcoin token.

Image source: Getty Images.

What the network says

To start, let's look at addresses. Rather than the total number of addresses, which is constantly growing, the rate at which new addresses are joining the network can be more telling. 

After reaching some of its lowest levels since early 2020, there has been a resurgence in the number of new addresses doing transactions on the network. During the past quarter, an average of more than 13.5 million new addresses joined the blockchain per month, according to Glassnode, a crypto research and data firm. The last time levels were this high was back in the first quarter of 2021 when Bitcoin went on a run that ended up with it just shy of $63,000. In fact, this March registered the largest increase of addresses since April 2021 with a whopping 14.4 million new users.

With a near record amount of new addresses using the network, it would be plausible to assume that transactions are also at cycle highs -- and that assumption would be correct. 

In Q1 of this year, Bitcoin averaged just shy of 9 million transactions per month as demand for the cryptocurrency soared. Similar to the rate of new address growth, you would have to go back to Q1 2021 when Bitcoin was comfortably in the midst of a bull market to find transactions at these levels. 

Not quite there yet

With address growth and an increase in transactions, Bitcoin has seen its price rise considerably since the beginning of 2023. From January to March, Bitcoin rallied 72%. Following the recurring theme of address growth and transaction counts, this was its best performance over a quarterly period since Q1 2021, when it skyrocketed 103%.

When taking into consideration the combination of all these metrics, it might be enough to call for the end of Bitcoin's bear market blues. However, optimism for a bull market like that of 2021 to return this year might be misconstrued. 

Rather, it seems Bitcoin is currently in no-man's land straddling the edges of the past bear market and its potential next leg up in a coming bull market. But while it remains in this territory, the world's most valuable cryptocurrency still looks to be a bargain. Considering that it remains more than 50% below its all time high and yet crucial metrics are near levels last seen when Bitcoin's price was worth more than $60,000, buying the cryptocurrency today could prove to be lucrative should a bull market return.