Bitcoin spot volumes confirm the ‘euphoric’ level of crypto markets – Glassnode
Investors' speculative interest in the crypto market has risen to levels seen in the 2021 bull run, as market participants await the Bitcoin halving event, which is expected to boost the price of BTC. This increases the chances of significant directional price movement.
The market is in a happy mood.
Bitcoin (BTC) price continues its impressive performance in 2024, with the top cryptocurrency hitting a new all-time high in March. BTC spot trading volume has increased since bitcoin ETFs began trading in the US on January 11, with daily volume peaking in March. Glasnode says the market has entered a “euphoric phase”, with profitability rising sharply.
The data suggests that Bitcoin's bullish momentum has been growing since October 2023 as the market has been pushed into a system of greater liquidity and volatility.
The crypto analytics firm reported that BTC's year-to-date performance was supported by “strong demand” in spot markets, mirroring the same structure seen during the 2021 bull run.
Since July 2023, the flow of Bitcoin foreign exchange has increased significantly. According to Glassnode data, the monthly average of total revenue and foreign exchange is currently at $8.19 billion per day, a peak from the 2021 bull market.
“Overall, Bitcoin's YTD price action has been supported by spot trading volume and on-chain volatility.”
With high liquidity and the upcoming Bitcoin supply halving, a cloud of euphoria is covering the market, a clear indication that the bull market has opened. Bitcoin's guaranteed gain also increased to 1.8% in March, retaking the 2021 high. This shows that “1.8% of the market value is locked in as profit in a 7-day period.”
Glassnode expects new capital to flow into Bitcoin because “the profit taken by one investor is matched by the demand from the buyer side on the other side.”
In terms of market volatility, this means that a new crop of investors is entering the market, “with an increasing share of wealth held by coins less than 6 months old with real cap HODL Waves,” writes Glassnode.
The total share of coins aged less than 6 months has increased significantly since the beginning of 2023, rising from 20% on January 1, 2023 to 47%. This ratio has reached between 84% and 95% in recent bull markets.
“Analysts should start paying more attention to the behavior of these new investors as their capital increases.”
However, the likelihood of a sustained bullish rally over the next few weeks is low as Bitcoin is trading above its 2021 all-time high.
“The balance of wealth is roughly balanced between long-term holders and new interests, suggesting that the ‘Euphoria' stage is still early from a historical perspective.”
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.
