Bitcoin Price Entering ‘Euphoria’ Zone Amid Wealth Shift From ‘HODLers To New Investors’ – Info
The price of Bitcoin (BTC) has rallied more than 200% over the past year, hitting a record high of over $73,000 on March 13. The rally pushed investor sentiment “closer to euphoria,” as wealth shifts from long-term holders to new investors. According to market intelligence firm Glassnode.
Bitcoin Investor Sentiment “Entering the Euphoria Zone”
According to this week's “The Week Onchain” report by market intelligence Glasnode, Bitcoin's approval of an all-time high of $69,000 in November 2021 created “the fourth new cycle ATH in history.”
Analyst Checkmate cites BTC's significant rally above $72,000, marking this phase of Bitcoin's bull run “into the ‘Euphoria Zone'” – a level that “tends to accompany new ATHs”.
This is reinforced by data from Alternative, which shows that the “feelings and sentiments” in the market are in the 81 “extreme” greed zone. When speculators enter the market, they become greedy as the market rises, causing FOMO (fear of missing out).
“This moment has historically triggered a distinct shift in investor behavior patterns, particularly in the relative balance between the HODLers and speculator cohorts,” Glassnode said.
Wealth Rotation From “HODLer Group to Speculators”
The on-chain analyst firm also noted the “typical” behavior of Bitcoin bull markets, where wealth is transferred from “old to young” investors.
As the chart below shows, “Investors who have stockpiled BTC at low prices over the past several months to years” have accelerated their distribution pressure as Bitcoin reaches new all-time highs.
“This wealth transfer is at play again, the amount of wealth held by ‘young coins' (moved in the last 3 months) has increased by 138% since October 2023.”
Glassnode emphasizes that “the net cost of long-term investors who have previously held their coins for at least 3 months.”
This information is confirmed by additional data from Glassnode, which shows that the number of new Bitcoin wallets increased by 54% from 308,743 to 475,005 within a month. This increase mirrored BTC's 58% gain over the same period.
Glassnode analysts report that short-term supply holders have increased by “+810k BTC” since November 2023, and believe it comes from two sources: “660k BTC transferred from long-term holders” and “150k BTC withdrawn from currency balances we control.”
Related: Will Bitcoin Halving Bring More Institutional Investors To Crypto?
On the contrary, the report states that the long-term holder's “supply decreased by -660k BTC” during the same period.
Checkmate said,
“Overall, this wealth transfer appears to follow a similar path to previous Bitcoin cycles and represents both a dynamic ownership structure, but also a dynamic balance between supply, demand and price.”
Bitcoin's rally triggered “point profit-taking”.
BTC's 70% year-to-date rally has triggered profit booking by long-term holders, “balanced by an equal amount of income from the short-term holding group.” This is reflected in fluctuations in the “real profit measure” – a component of the “net profit/loss measure” about capital flows, demand intensity and network profitability.
According to the report,
“This week, the chain's cost-locked realized profit hit a statistically significant high, trading more than one standard deviation above its long-term average.”
According to Glassnode, this is one of the signs of the beginning of the ‘Euphoria' phase, as seen during the bull run of 2017 and 2021.
According to Glassnode, the proven leverage ratio has risen to “highly positive levels, indicating higher leverage and long-term leverage.”
According to Cryptoslate analyst James Van Straten, “the accumulation is a little early to give” because “consistently recorded gains” from short and long holders reached $4 billion on March 11.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
