Bitcoin's Record Surge Enters 'Euphoria Zone', Triggers Wealth Transfer to New Investors
Summary:
Bitcoin's price has surged over 200% in the past year, breaking records and hitting a new all-time high of over $73,000 on March 13. This rally has pushed investor sentiment into what market intelligence firm Glassnode defines as the "euphoria zone," with wealth being transferred from long-term holders to new investors. Glassnode also reported a surge in new Bitcoin wallets and a shift in investor behavior patterns, both typical characteristics of Bitcoin bull markets.
Over the past year, Bitcoin (BTC) has surged by over 200%, setting a new record high of more than $73,000 on March 13. Market intelligence firm Glassnode reports this uptick has brought investor sentiment “nearly to a state of euphoria,” characterized by a shift of wealth from old investors to new ones as Bitcoin breaks its fourth cycle all-time high.
Glassnode's latest weekly "The Week Onchain" report mentions that Bitcoin's recent ascension past the previous all-time high of $69,000, set in November 2021, marks the “fourth new cycle ATH in history.” Analyst Checkmate highlights BTC’s impressive climb beyond $72,000, which has moved this period of Bitcoin's bull run into the 'Euphoria Zone' — a phase often coinciding with new ATHs.
Data from Alternative backs this up, showing market “sentiments and emotions” at a 'extreme greed' level of 81. In the 'extreme greed' phase, akin to the 'euphoria phase,' investors often exhibit heightened greed during market rises, resulting in FOMO as speculators join the fray.
According to Glassnode, this moment has traditionally brought about significant changes in investor behavior, especially in relation to the balance between long-term HODLers and Speculator groups.
Glassnode also highlighted a typical trait of Bitcoin bull markets is the transference of wealth from "old to young" investors. The chart shows that "investors who purchased BTC at lower prices several months to years ago" have escalated their distribution pressure as Bitcoin hits new all-time highs.
Furthermore, Glassnode data shows new Bitcoin wallets have surged by 54% from 308,743 to 475,005 within a single month, paralleling BTC’s 58% gain in the same period.
The firm's analysts report a rise in short-term supply holders by “+810k BTC” since November 2023, with two primary sources: “660k BTC moved from long-term Holders” and “150k BTC withdrawn from monitored exchange balances.”
However, the report points out that long-term holder “supply has diminished by -660k BTC” over the same time frame. Checkmate notes that, “In general, this wealth transfer seems to be following a similar route to previous Bitcoin cycles, reflecting not only a change in ownership structure but also the fluctuating equilibrium of supply, demand, and price.”
BTC’s 70% rally since the start of the year has led to profit-taking by long-term holders, "offset by an equal magnitude of incoming demand from the short-term holder group." This is indicated by an increase in the “the Realized Profit metric.”
Glassnode notes that the magnitude of Realized profit confirmed via on-chain spending has reached notably high levels. This, according to Glassnode, is a hallmark of the beginning of the 'Euphoria' phase, as seen in the 2017 and 2021 bull runs.
Cryptoslate analyst James Van Straten suggests “accumulation is slightly exceeding issuance” due to “persistent record profit-taking” from both short and long-term holders, which amounted to $4 billion on March 11.
Published At
3/14/2024 12:53:06 AM
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