Bitcoin (BTC), despite its price more than doubling over the past year, continues to offer an alluring risk-reward ratio for potential investors, as indicated by an on-chain metric that accurately forecasted the bull run in early 2023.

The “reserve risk” indicator, which assesses the confidence of long-term holders by their propensity to defer spending their coins, remains firmly in the so-called green zone below 0.002, as per data tracked by CryptoQuant. This metric fluctuates between 0 and 1.

A low reading suggests that long-term holders are incentivized to retain their bitcoin at the prevailing market rate rather than sell, indicating favorable demand-supply dynamics and an attractive risk-reward proposition for new or additional investments.

“The reserve risk remains in the green zone, signifying that purchasing BTC at the current levels still offers an extraordinary reward-to-risk ratio. Historically, investing in bitcoin during periods when the reserve risk is in the green zone has yielded substantial returns over time,” stated MintingM, a crypto research firm based in India, in an interview with CoinDesk.

Reserve risk typically oscillates in tandem with bullish and bearish market trends. Historically, the green zone below 0.0027 has marked a gradual transition from the final stages of a bear market into a bull market. Conversely, readings above 0.02 have signaled bull-market peaks.

Additional metrics measuring the percentage of supply that remains inactive over specified periods also reflect a resurgence in holding behavior after profit-taking at record highs earlier this year.

“Bitcoin bull markets inherently generate sell-side pressure as elevated prices incentivize long-term holders to realize profits on some of their holdings. This phenomenon is evident through the significant decline in the Supply Last Active 1y+ and 2y+ metrics throughout March and April,” noted blockchain analytics firm Glassnode in a weekly report. “The recent slowdown in the rate of decline across these curves indicates a gradual return to HODLing as the dominant investor behavior.”

The persistent bullish signals from on-chain indicators align with the market consensus that impending interest-rate cuts by the U.S. Federal Reserve could catalyze a bullish breakout for bitcoin, escaping its prolonged trading range between $60,000 and $70,000.