Bitcoin (BTC) is re-entering a bull market “euphoria” zone highly reminiscent of the asset’s strongest historical price runs, according to a report by on-chain analysts at Glassnode published Tuesday.
After convincingly breaking above $70,000 earlier this week, investors’ on-chain behavior looks very similar to when Bitcoin broke all-time highs in years past, the report notes.
Data Shows Bitcoin Market Euphoria
One example is found in Bitcoin’s “realized cap” – the total value of all bitcoins put together based on the price that each coin was last transacted at.
The metric is now at an all-time high of $504 billion, and increasing at a rate of $54 billion per month. That means massive amounts of new capital are entering the space, at a pace reminiscent of early 2021.
Another similarity: coins are rapidly changing hands from long-term HODLers to short-term speculators.
“Investors who accumulated BTC at cheaper prices several months to years in the past, tend to accelerate their distribution pressure as new ATHs are reached,” wrote Glassnode in its weekly report. “This wealth transfer is once again in play, with the proportion of wealth held by ‘Young coins’ (moved within the last 3-months), increasing by 138% since October 2023.”
From its all-time high in November 2023, the BTC supply held by long-term holders has fallen by 660,000 coins. Meanwhile, short-term holder supply has risen by 810,000 coins, gaining from both long-term holders and exchange balances.
Furthermore, as long-term holders rotate out of their early holdings, the “realized price” is beginning to skyrocket, moving one standard deviation above its long-term mean.
The same pattern of HODLers realizing massive gains is visible in Bitcoin’s spent-output profit ratio (SOPR). The metric shows that current spenders are locking in an average profit of 27%.
“This dynamic reflects a healthy balance between distribution pressure, and new demand, but also gives us a glimpse into the mechanics which, eventually, go on to establish cyclical tops,” Glassnode concluded.
Institutions or Retail Causing Bitcoin Market Spike?
Vincent Maliepaard, Managing Director at IntoTheBlock, affirmed to Cryptonews that the market is entering Euphoria – though he is not convinced that retail buyers have entered in size quite yet.
“You can look at the number of new Bitcoin addresses, and you will notice it hasn’t really increased since the start of the year,” he noted.
In conclusion, the analyst said institutions are likely more responsible for Bitcoin’s recent pump, particularly through buy pressure within the new Bitcoin spot ETFs. The rising number of on-chain transactions with a volume larger than $100,000 supports this theory.
“Of course, the ETF demand can be partially driven by retail investors, but it is interesting to note how different the current move is from the previous ones,” he said.
By contrast, Bitwise CEO Matt Hougan – whose company operates one of the larger Bitcoin ETFs – claims retail and family offices are still a large driver of demand for the ETFs, while corporations are only starting to enter the fold.
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