Key Points
- Anticipation for the Bitcoin halving event has sparked a surge in speculative interest in the crypto market.
- Bitcoin’s performance in 2024 continues to impress, reaching new all-time highs and showing strong demand in spot markets.
The crypto market is currently seeing a rise in speculative interest similar to the levels observed during the 2021 bull run, as investors eagerly await the Bitcoin halving event. This heightened interest increases the likelihood of a significant directional price movement.
A Market in Euphoria
The price of Bitcoin (BTC) is continuing its impressive run in 2024, reaching new all-time highs in March. The daily volumes of BTC spot trading have spiked since the initiation of spot Bitcoin ETFs in the U.S. on January 11, with the highest volumes recorded in March. This surge in activity has marked a transition to a state of market euphoria, with a noticeable increase in profit-taking.
Since October 2023, Bitcoin has been gaining bullish momentum, pushing the market into a high liquidity and volatility regime. The strong demand in spot markets is supporting BTC’s year-to-date performance, reflecting a similar structure to the 2021 bull run.
Increased Exchange Flows
The flow of Bitcoin into and out of exchanges has seen a significant increase since July 2023. Current data indicates that the daily average of total inflows and outflows from exchanges is around $8.19 billion, a figure considerably higher than the peak of the 2021 bull market. This increase in spot trade volume and exchange flows on-chain is supporting Bitcoin’s year-to-date price action.
With high liquidity and the upcoming Bitcoin supply halving, the market is engulfed in a state of euphoria, signalling that the bull market is in full swing. The realized profit of Bitcoin also rose to 1.8% in March, matching the 2021 peak. This indicates that 1.8% of the market cap was secured as profit over a seven-day period.
New investors are expected to inject capital into Bitcoin, as profits taken by one party are balanced by the demand from the buying party. The increasing share of wealth held by coins younger than six months in the Realized Cap HODL Waves illustrates this influx of new investors.
Since early 2023, the aggregate share of coins younger than six months has risen sharply from 20% to 47%. This metric reached between 84% and 95% during the previous bull markets. As the share of capital held by these new investors grows, it becomes more important to monitor their behavior.
However, the likelihood of a sustained bullish rally over the next few weeks is low due to profit-taking as Bitcoin trades above its 2021 all-time high. The balance of wealth is roughly equal between long-term holders and new demand, suggesting that the market is still in the early stages of the ‘Euphoria’ phase.
