Research indicates that the cryptocurrency market is about to enter a euphoric phase due to a new inflow of investment funds.
According to a Glassnode analysis, investors’ speculative interest in the cryptocurrency market has increased to levels witnessed in the 2021 bull run as market participants await the Bitcoin halving event, which is anticipated to drive BTC’s price higher.
This raises the likelihood of a significant directional price shift.
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In 2024, the price of Bitcoin maintains its remarkable trend, with the leading cryptocurrency reaching new all-time highs in March.
From the moment Bitcoin ETFs started trading in the United States on January 11, the volume of BTC spot trading has increased dramatically, reaching a daily peak in March.
The market has “moved into a euphoric phase,” according to Glassnode, with profit-taking sharply increasing.
Data indicates that since October 2023, when the market was forced into a regime of high liquidity and volatility, Bitcoin’s positive momentum has been increasing.
According to the crypto analytics company, “strong demand” in spot markets has been supporting Bitcoin’s year-to-date performance, which is consistent with a pattern observed during the 2021 bull run.
Since July 2023, the amount of bitcoin entering and leaving exchanges has also dramatically surged.
According to Glassnode data, the average monthly total inflows and outflows from exchanges is approximately $8.19 billion, which is significantly more than the peak of the 2021 bull market.
All things considered, a notable increase in spot trade volume and on-chain exchange flows supports Bitcoin’s year-to-date price action.
A cloud of enthusiasm is engulfing the market due to strong liquidity and the impending half of the Bitcoin supply, which is a definite sign that the bull market is underway.
In March, Bitcoin’s realised profit also rose to 1.8%, taking it back to its peak from 2021. This implies that during the course of seven days, “1.8% of the market cap was locked in as profit.”
Since “profit taken by one investor is matched by inflowing demand from the buying party on the other side,” Glassnode anticipates an influx of fresh capital into the Bitcoin market.
According to Glassnode, the “rising share of wealth held by coins younger than 6 months in the Realised Cap HODL Waves” indicates that a new wave of investors is joining the market.
Since early 2023, the overall percentage of coins younger than six months has grown significantly, from 20% on January 1, 2023, to 47% now. Between 84% and 95% of this measure was attained in the previous bull periods.
As these new investors’ part of the capital rises, analysts ought to start focusing more on their behavior.
However, the chances of a sustained bullish rally over the next few weeks remain low due to profit-taking as Bitcoin trades above its 2021 all-time high.
The wealth distribution between new demand and long-term holders is roughly balanced, indicating that, historically speaking, the ‘Euphoria’ phase is still relatively early.
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