Bitcoin is continuously reaching new ATHs, supported by strong capital inflows from both ETFs and the spot market, with over $62.9 billion entering the market in the past 30 days. The market continues to "heat up", leading the long-term holder group to shift towards increased distribution.
Bitcoin: Price Performance Since Cycle Low
Since the beginning of November, the price performance of Bit has been impressively outstanding, continuously setting new all-time highs (ATHs) throughout the month. When comparing the price journey of the current cycle with the 2015-2018 
and 2018-2022 cycles, a striking and persistent similarity can be observed. Both the magnitude of the price increase and the duration of the growth phase are remarkably consistent, despite vastly different market conditions.
History has shown that previous bull markets typically last from 4 to 11 months from the current point in time, providing a useful reference framework to assess the duration and momentum of the cycle.
Stablecoins: Exchange Net Position Change
The large capital inflow from stablecoins into the market has reached nearly $9.7 billion in the past 30 days, primarily allocated directly to centralized exchanges (CEXs). This reflects the tight connection between stablecoin capital flows and overall market capital volume during the same period, highlighting the crucial role of stablecoins in driving market activity:
- Strong speculative demand: The significant increase in stablecoins on exchanges indicates that investors are preparing to capitalize on market trends, with expectations of price appreciation.
- Impact on market momentum: As stablecoin capital increases, this not only boosts liquidity but also provides a foundation for subsequent price increases, reinforcing the bullish sentiment.
Bit: Long-Term Holder Supply in Profit Anlysis
As the Bit price surpassed $75.6k, 100% of the 14 million BTC held by long-term holders (LTHs) have entered a state of profitability, leading to an increase in selling activity. This has resulted in a slight decrease in the balance, with over 200,000 BTC spent since the price reached its peak.
Bit: Long-Term Holder Spending Binary Indicator
We can use the Long-Term Holder Spending Binary Indicator to assess the intensity of selling pressure from long-term holders (LTHs). This tool measures the percentage of days in the past two weeks where the amount of Bit sold exceeded the amount accumulated, resulting in a net decrease in the Bit balance held by this group.
Since the beginning of September, as the Bit price began to rise sharply, the spending of LTHs has been gradually increasing. With the recent price increase to $93k, this indicator has reached a level indicating that 11 out of the past 15 days have seen a decrease in the LTH balance.
This suggests that the distribution pressure from long-term holders is increasing, although it has not yet reached the levels observed around March 2021 and March 2024.
Bit: Puell Multiple
The Puell Multiple helps us understand market cycles from the perspective of Bit mining.
This is an important indicator for assessing mining profitability, calculated as the ratio of the daily value of newly minted Bit (in USD) to the 365-day moving average of that value. By comparing the short-term revenue of miners to the long-term medium, the Puell Multiple provides information about the profitability of mining.
The Puell Multiple is often used to analyze the relationship between mining revenue and market volatility.
Over the past 5 years, the Puell Multiple has crossed above the 365-day moving average (SMA365) three times, and each time it has marked the beginning of a Bit price increase:
- March 30, 2019 → Bit increased by more than 83%.
- January 8, 2020 → Bit increased by more than 113%.
- January 9, 2024 → Bit increased by more than 76%.
This data shows that after the Puell Multiple stabilizes above the SMA365, the Bit price has increased by an average of around 90% in each cycle.
Summary
Bit has been supported by strong capital inflows, with around $62.9 billion in capital entering the digital asset space in the past 30 days.
With the shift in supply from LTHs to increased liquidation, Bit is entering a new phase of dynamic equilibrium, where the selling pressure from long-term investors may be limited by strong buying demand from the market. In this context, prices may continue to rise as many LTHs maintain their holdings and only sell at higher expected prices. In the short term, this selling may even exceed the capital inflows into Bit ETFs.
What do you think the market will be like going forward? I'll see you in Onchain issue 48/2024 on the Coinmoi website to see how the indicators are moving during this time.
The article Onchain Week 47/2024: Bit with Liquidation Wave first appeared on CoinMoi.
