Abstract
· The strong capital inflows into the ETF and spot markets have driven Bitcoin to $93,000. Over the past 30 days, more than $62.9 billion has entered the market, with BTC dominating the demand inflows.
· The increase in unrealized profits of long-term holders has triggered a massive spending activity, with 128,000 bitcoins sold between October 8 and November 13.
· The US spot ETF played a key role, absorbing about 90% of the selling pressure from long-term holders during the analysis period. This highlights the growing importance of ETFs in maintaining liquidity and stabilizing the market.
Surge in Capital Inflows
Since early November, Bitcoin's price performance has been outstanding, forming new ATHs throughout the month.Comparing the price performance of the current cycle with the 2015-2018 (blue) and 2018-2022 (green) cycles, we can see a remarkably persistent similarity. Despite vastly different market conditions, the magnitude and duration of the rallies are surprisingly consistent.
This long-term consistency across cycles is still fascinating, as it provides insights into the macro price behavior and cyclical market structure of Bitcoin.
Historically, past bull markets have lasted 4 to 11 months from the current point, providing a historical framework for assessing cycle duration and momentum.
A new ATH of $93,200 was set this week, bringing Bitcoin's quarterly performance to an impressive +61.3%. This is an order of magnitude higher than the relative performance of gold and silver, which saw quarterly gains of +5.3% and +8.0%, respectively.
This stark contrast suggests thatcapital may be shifting from traditional commodity stores of value to Bitcoin, a younger, emerging, and more digitized asset.
Bitcoin's market capitalization has also expanded to a staggering $1.796 trillion, making it the world's seventh-largest asset. This milestone places Bitcoin above two globally significant assets: $1.763 trillion in silver and $1.791 trillion in Saudi Aramco.
To date, Bitcoin trails only Amazon by 20%, making it the next important milestone for it to join the ranks of the world's most valuable assets.
Following Bitcoin's impressive 90-day performance, the broader digital asset market has experienced a significant influx of capital. Over the past 30 days, total inflows have reached $62.9 billion, with Bitcoin and Ethereum networks absorbing $53.3 billion, while stablecoin supply increased by $9.6 billion.
This is the highest level since the March 2024 peak, reflecting a restoration of confidence and new demand following the US presidential election.
Expanding the observed capital inflows, the vast majority of the $9.7 billion in stablecoins minted over the past 30 days have been directly deployed to centralized exchanges. This inflow is closely correlated with the overall capital flow of stablecoin assets during the same period, highlighting their key role in stimulating market activity.
Thesurge in exchange stablecoin balances reflects investors' strong speculative demand to capitalize on the trend, further reinforcing the bullish narrative and post-election momentum.
Investigating Investor Profitability
So far, we have explored the trend of rising market liquidity, which has supported Bitcoin's outstanding performance. In the next section, we will use the MVRV ratio to assess how this price behavior has impacted the unrealized profitability (paper gains) of market investors.
Comparing the current value of the MVRV ratio (orange) to its annual moving average (blue), we can see an accelerated growth in investor profitability. This phenomenon is typically a supportive environment for sustained market momentum, but it also creates conditions where investors are more likely to start taking profits and realize their paper gains.
As market investor profitability increases, the potential for new selling pressure also rises. By overlaying the MVRV ratio with ±1 standard deviation bands, we can construct a framework to assess overbought and oversold market conditions.
· Overbought (warm colors): MVRV trading above +1SD
· Underbought (cool colors): MVRV trading below -1SD
Bitcoin's price has recently broken above the +1σ range, at $89,500. This indicates that investors currently hold statistically significant unrealized profits and suggests an increased likelihood of profit-taking activity.
However, historically, the market has remained in this overbought state for extended periods, particularly with sufficient capital inflows to absorb the selling pressure.
Extreme Spending by Long-Term Holders
In the thriving stages of the market cycle, the behavior of long-term investors becomes crucial. LTHs control a significant portion of the supply, and their spending dynamics can greatly impact market stability, ultimately shaping local and global tops.
We can use the NUPL metric to assess the paper gains held by LTHs, which currently stands at 0.72, slightly below the belief (green) to euphoria (blue) threshold of 0.75.Despite the significant price increase, these investors' sentiment remains lower compared to previous cycle tops, suggesting there may be further room for growth.
As Bitcoin broke above $75,600, the 14 million bitcoins held by long-term holders became 100% profitable, triggering an acceleration in spending. This has resulted in a +200k BTC decline in balances since the ATH breakout.
This is a classic and recurring pattern, where long-term holders begin to take profits as long as the price trend remains strong and demand is sufficient to absorb the profits.As LTHs still hold a substantial amount of Bitcoin, many LTHs are likely waiting for higher prices before releasing more bitcoins back into the circulating supply.
We can use the Long-Term Holder Spent Output Ratio to assess the intensity of LTH selling pressure. This tool evaluates the percentage of days in the past two weeks where the group's spending exceeded its accumulated holdings, resulting in a net decrease in their holdings.
Since early September, as Bitcoin's price has risen, long-term holder spending has steadily increased. With the recent surge to $93,000, the metric has reached a level indicating that LTH balances have declined on 11 out of the past 15 days.
This highlights the increasing distribution pressure from long-term holders, although it has not yet reached the levels observed around the March 2021 and March 2024 peaks.
After identifying the increased spending behavior of long-term holders, we can refer to the next tool to gain a deeper understanding of their activity around key market points. The interplay between profit-taking and unrealized profits helps to highlight their role in shaping cycle transitions.
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· LTH price (blue): The average acquisition price of long-term holders.
· Profit/loss pricing range (blue): Represents the range of extreme profits (+150%, +350%) and losses (-25%) that typically trigger significant spending activity.
· Profit-taking (green): The stage where long-term holders hold over 350% profits and increase spending.
· Sell-off (red): The high-spending period when long-term holders are in a -25%+ loss state.
The price of Bitcoin has surged to over 350% profit range (at $87,000), prompting this group to see significant profit-taking behavior. As the market rises, distribution pressure may increase, and these unrealized gains will also expand accordingly. In other words, this historically marks the beginning of the most extreme phase of the previous bull market, with unrealized profits growing to over 800% in the 2021 cycle.
Institutional Buyers
Now, let's turn our attention to the role of institutional buyers in the market, particularly through the US spot ETFs. In recent weeks, ETFs have been the main source of demand, absorbing the majority of the selling pressure from LTHs. This dynamic also highlights the growing influence of institutional demand in shaping the modern Bitcoin market structure.
Since mid-October, weekly ETF inflows have surged to $10-20 billion per week. This represents a significant increase in institutional demand and is one of the most pronounced periods of capital inflows to date.
To visualize the balance between LTH selling pressure and ETF demand, we can analyze the 30-day change in Bitcoin balances for each group.
The chart shows that from October 8 to November 13, ETFs absorbed around 128,000 BTC, accounting for about 93% of the 137,000 BTC net selling pressure exerted by LTHs. This highlights the critical role of ETFs in stabilizing the market during periods of increased selling activity.
However, since November 13, the selling pressure from LTHs has started to exceed the net inflows to ETFs, echoing the pattern observed in late February 2024, when the imbalance between supply and demand led to increased market volatility and consolidation.
Conclusion
Bitcoin's surge to $93,000 was supported by strong capital inflows, with around $62.9 billion in capital flowing into the digital asset space over the past 30 days. This demand has been led by institutional investors through US spot ETFs, even as capital has flowed out of gold and silver.
ETFs have played a critical role, absorbing over 90% of the selling pressure from long-term holders. However, as unrealized profits reach more extreme levels, we can expect increased spending from LTHs, with their inflows likely to exceed ETF inflows in the short term.
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