With the Bitcoin halving event approaching and predictions of price increases, there’s been a surge in investor interest in the crypto market, as indicated by a recent Glassnode report. This heightened speculation raises the likelihood of significant price movements.
The market is in a state of euphoria
In the year 2024, Bitcoin (BTC) has shown remarkable growth and achieved new record-breaking prices in March. The surge in Bitcoin’s value can be linked to the debut of spot Bitcoin ETFs in the United States on January 11. Consequently, the trading volume for BTC spots has escalated dramatically, with daily volumes reaching their highest point in March. According to Glassnode, the market is currently experiencing a phase of euphoria, leading to a significant increase in profit-taking.
The data indicates that Bitcoin’s bullish trend has been growing stronger since October 2023. During this time, the market has been characterized by increased liquidity and heightened volatility.
A crypto analysis company stated that Bitcoin’s strong yearly growth can be attributed to robust market demand in current transactions, reminiscent of the pattern observed during the 2021 market surge.
The amount of Bitcoin moving in and out of cryptocurrency exchanges has noticeably surged since July 2023. According to Glassnode analysis, the daily average of inflows and outflows from these platforms now reaches $8.19 billion, which is significantly greater than the peak observed during the 2021 bull market.
“Overall, Bitcoin’s YTD price action is supported by a significant uptick in spot trade volume and exchange flows on-chain.”
Because of Bitcoin’s large amount of availability and the approaching reduction in new supply, there’s a sense of excitement in the market, showing that a bull run is underway. The earnings from past Bitcoin transactions reached 1.8% in March, returning to the highest value this year. This can be interpreted as “1.8% of the total market value was earned as profit over the last week.”
According to Glassnode, as some investors cash out their Bitcoin profits, an equivalent amount of money is anticipated to enter the market, fueled by the purchasing demands of other investors.
According to market trends, there’s been an influx of new investors joining the market based on the increasing proportion of cryptocurrency wealth possessed by coins that are less than six months old, as indicated by the Realized Cap HODL Waves from Glassnode.
In simpler terms, the proportion of coins that are less than 6 months old has significantly grown since the beginning of 2023, rising to nearly half (47%) compared to just one-fifth (20%) on New Year’s Day in 2023. This figure previously ranged between 84% and 95% during past market upturns.
“Analysts should start to pay more attention to the behavior of these new investors as their share of the capital increases.”
Nevertheless, the probability is relatively small for a prolonged upward trend in Bitcoin‘s price over the coming weeks given that investors are cashing out their profits with the cryptocurrency currently trading above its record high from 2021.
“The balance of wealth is approximately balanced between long-term holders and new demand, suggesting the ‘Euphoria’ phase is still relatively early from a historical perspective.”
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2024-04-09 21:43