The analytical company Glassnode, in its regular weekly report on the cryptocurrency market, studied changes in the reserves of Bitcoin held by various categories of market participants. Using data and metrics from past market cycles of the first cryptocurrency, experts determined the proximity of Bitcoin to the “euphoria zone” against the backdrop of renewed historical highs. Analysts note that during a bull period in the cryptocurrency market, there is a redistribution of assets and a change of owners of bitcoins – assets flow from long-term investors to new participants and speculators. Investors who bought Bitcoin at low prices in the past are taking profits as they reach new all-time highs. This leads to an increase in the share of so-called young coins (moved within the last three months) in circulation. Since October 2023, the share of “young” coins has increased by 138%, which indicates an increase in bitcoin sales by long-term investors.
Based on an analysis of Bitcoin blockchain data, experts estimate that since November 2023, the coin holdings of long-term investors have decreased by 660,000 bitcoins, half of which is due to the redemption of shares of the Grayscale Bitcoin Trust (GBTC) exchange-traded fund. Short-term holders and speculators, on the contrary, increased the reserves in their wallets by 810 thousand bitcoins, while 660 thousand were received from long-term holders, and 150 thousand were withdrawn from exchanges.
Previous Bitcoin growth cycles have seen a decline in the number of coins held by long-term investors. This decline ranged from 14 to 25% and created selling pressure on Bitcoin as the price rose. In contrast, inventories among short-term holders increased by an average of 83% as price peaks were reached. Short-term holders are accumulating Bitcoin, likely due to the hype and hope for its further growth, analysts say. If these changes in the holdings of coins by different categories of market participants reflect a shift in supply and demand, then in the current cycle, Bitcoin has passed through about a third of the standard distribution cycle.
Another indicator for tracking the redistribution of assets between different categories of holders – RHODL, which shows the ratio of the value of coins held for less than a week to the value of coins that are one to two years old – approached the value of 6.3 thousand, a level corresponding to periods of achievements Bitcoin’s historical highs in the past. Glassnode analysts have warned that rising investor unrealized gains amid Bitcoin’s new all-time high are increasing selling pressure on the first cryptocurrency, with indicators pointing to long-term investors approaching euphoria.
Meanwhile, spot exchange-traded funds continue to accumulate bitcoin at a record pace. The net inflow of funds into spot Bitcoin ETFs following the trading session on March 12 amounted to more than $1 billion. This is a record since their inception. Almost the entire volume – $849 million – came from the BlackRock fund, which the day before surpassed the largest corporate holder of the first cryptocurrency MicroStrategy in terms of the number of accumulated bitcoins. The IBIT exchange-traded fund, a Bitcoin ETF from BlackRock, now has just over 200 thousand bitcoins, or $14.7 billion, on its balance sheet. The value of assets under management of 10 spot ETFs reached $58.7 billion, which is approximately 4.21% of all existing coins. Since the launch of exchange-traded funds on January 11, 2024, the total inflow of funds into Bitcoin ETFs has reached $4.1 billion.
Spot Bitcoin exchange-traded funds dominate the market for ETFs related to the first cryptocurrency. The share of spot funds in daily trading volume is 90%. At the same time, the share of futures-based Bitcoin ETFs fell sharply to 10%.
Fund inflows could increase further due to efforts by issuers to sell fund units, include them in asset manager portfolios, and normalize outflows from Grayscale Bitvoin Trust (GBTC). According to the forecast of our analysts, if the current trend in the influx of funds into exchange-traded funds (ETFs) for Bitcoin continues, the price of the first cryptocurrency could reach $112 thousand by the end of 2024.
Bitcoin price cleared the 50% Fibonacci retracement level of the downward move from the swing high of $73,000 to the low of $68,660. The hourly chart of the BTC/USD pair is also forming a bullish connecting line with support at $71,300. Bitcoin is currently trading above $71,500 and the 100-hour simple moving average. Nearby resistance is near the $72,000 level and the 76.4% Fibonacci retracement level of the downward move from the $73,000 swing high to $68,660 low.
And in the United States, it seems, they are entering a “phase of looting the treasury.” Two crypto industry influencers urged their followers on X to buy up Bitcoin (BTC), gold and silver, citing the risk of rising government debt in the United States. In Post X, entrepreneur and angel investor Balaji Srinivasan argues that Bitcoin is the only realistic solution to avoid losses from unsustainable government spending and potential asset confiscation. “We are in the midst of a Treasury heist during an imperial collapse,” the former Coinbase CTO told his 994,000 followers. Srinivasan argues that public debt and wasteful spending continue to grow rapidly at unsustainable levels. The US national debt is currently at a record high of $34.5 trillion, up 25% since 2020. “Rich Dad Poor Dad” author Robert Kiyosaki also advised “being prepared” and investing in savings assets like Bitcoin in a March 11 post. “The debt is increasing by $1 trillion every 90 days. America is sick. Prepare now. Buy more gold, silver, bitcoin. Please take care of yourself,” Kiyosaki recommends.
A large amount of economic and inflation data will be published in the US this week. The figures include the adjusted core consumer price index (CPI) for February, the producer price index (PPI) for February and the annual inflation forecast.
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