Bitcoin's rally over the weekend has left many observers convinced that the bull market is back — and the data now backs them up.

A new report from data firm CryptoQuant shows that the leading cryptocurrency has crossed above its 365-day moving average, a signal that the asset has exited bear market territory. The 365-day moving average tracks an asset's average price over the past year, and long-term averages of this kind are among the most widely followed gauges in technical analysis, used to distinguish sustained uptrends from prolonged downturns.

Bitcoin's price surged in August, delivering its best run in years after the U.S. Treasury announced it would at least double the size of its liquidity-support buyback operations. The rally cooled before picking up again last week, and Bitcoin was recently trading at $86,598 after touching a high of nearly $87,330 on Monday.

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"This crossover is the definitive technical signal that has marked the start of Bitcoin's bull markets in past cycles, and it is the first time price has reclaimed the 365-day moving average since March 2023," the report read.

CryptoQuant described the moving average as a "cycle-defining" line that has confirmed the start of bull runs in previous years.

"Its track record across cycles is why this reclaim carries real weight rather than being a routine bounce," the report added.

The report went on to say that long-term holders appear to have finished selling, clearing the way for new investors to enter the market. That cohort's behavior is closely tracked because it shapes how much supply is available for newcomers to buy.

Bitcoin notched a record of $126,080 in October of last year before beginning to sink later that month, when the biggest liquidation event in crypto history saw over $19 billion in bets closed. The asset continued to slide through the first half of this year as the Federal Reserve made clear it was in no hurry to lower interest rates and investors increasingly threw money at artificial intelligence-related stocks in search of returns. The last time price reclaimed the 365-day line, in March 2023, it preceded the extended run that carried Bitcoin to that record.

The so-called debasement trade — in which investors buy an asset to hedge against a currency losing its value — is hot again. Bitcoin and precious metals like gold have done well when the dollar has weakened.

Last week, the Federal Reserve raised interest rates to get sky-high inflation in the U.S. under control. Investors shrugged off the central bank's move and bought up the asset. Rate increases are generally considered a headwind for risk assets, which made the market's ability to absorb the hike notable.

People now appear more interested in buying an asset that can protect them from government debt and deficit. In August, total U.S. debt topped $40 trillion for the first time. From here, the details to watch are whether Bitcoin can stay above the 365-day line, whether long-term holders continue to refrain from selling, and how the macro picture — Treasury buybacks, Fed policy, and the growing U.S. debt load — evolves.

This article first appeared on Bitcoin Magazine and was written by Mathew Di Salvo.