Chainfeeds Introduction:
Bitcoin continues to trade above $100,000, benefiting from continued capital inflows. Long-term holders are taking advantage of this liquidity window and seizing the opportunity to massively distribute supply, achieving new all-time high profits (ATH) totaling $2.1 billion.
Source:
https://insights.glassnode.com/the-week-onchain-week-51-2024/
Article author:
glassnode
Viewpoint:
glassnode: Bitcoin has performed exceptionally well in 2024, with a year-to-date return of more than 150%, and prices have remained above $100,000 for several weeks. By comparing past market cycles, it can be observed that this cycle has significant similarities with the 2015-2018 and 2018-2022 cycles. Despite the order of magnitude increase in market size, the price performance of this cycle remains strikingly similar to that of previous cycles. This trend is particularly noteworthy because a larger market size requires a larger capital inflow to support the same growth. At the same time, as the market continues to mature, the price corrections in each bull market are gradually weakening. The largest correction in this cycle occurred on August 5, 2024, with a price drop of 32%. In addition, most of the corrections have remained 25% below the local high, making this cycle one of the least volatile cycles to date. This phenomenon may be due to the strong demand brought about by the launch of spot Bitcoin ETFs and the growing interest of institutional investors. As the price of Bitcoin surpassed $100,000 and remained there for several weeks, long-term holders (LTH) began to distribute their holdings on a large scale, with selling pressure exceeding the level when Bitcoin reached $73,000 in March 2024. The selling activity in this cycle has reached an unprecedented scale, with LTH achieving a new high of $2.1 billion in daily profits. This large-scale profit realization shows that the market demand for Bitcoin remains strong. Assuming that there is a corresponding buyer for every seller, it can be inferred that the market has absorbed the equivalent of $2.1 billion in new capital during this period. In particular, the proportion of wealth distributed has increased significantly recently, indicating that more and more new investors are entering the market, driving further growth in demand. However, the proportion of network wealth held by new investors has not yet reached the peak of previous bull cycles. This suggests that the market may not have reached the speculative frenzy and saturation seen in previous cycles. This supply and demand dynamic provides a positive signal for the current market health, while also suggesting that the market may still have room to rise further. To assess the health of the market, the AVIV ratio can be used to analyze the average unrealized profits (i.e., paper gains) of market participants. Typically, a bull market may be nearing its end when all types of investors are holding significant profits, as this leads to significant selling pressure and a lack of new investors willing to take over at high prices. Currently, the AVIV ratio has not yet reached its extreme level (+3σ), which suggests that the market is not yet overheated and may have further room to rise. This analysis further supports the hypothesis that the market has not yet reached its peak. In addition, the increase in the proportion of wealth of new investors also shows strong support from the demand side. However, this redistribution of wealth also shows that the proportion of coins held by mature investors is decreasing, which usually occurs in the later stages of a bull market cycle. Nevertheless, the strong demand in the market is effectively hedging the selling pressure from long-term holders, maintaining price stability. 【Original text in English】
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