Bitcoin Enters High-Risk Zone, Possibly Signaling Start of Bull Market
Summary:
Crypto analysis firm, Glassnode, warns that Bitcoin (BTC) is entering a "high-risk" zone, a stage that could indicate the start of a bull market. The marker gauging Bitcoin's long-term worth relative to its market share has risen into risky territory, suggesting significant profitability for long-term investors. This period also saw Bitcoin's price rise from $42,317 to $48,582. Other notable movements include diminishing outflows from Grayscale Bitcoin Trust's ETF and $9.1 billion inflows into nine Bitcoin ETFs launched on January 11th.
Bitcoin's (BTC) value, as per on-chain indicators, is entering a risky terrain, pointing to the potential early stages of a bull market, warns digital currency analysis firm, Glassnode. In a February 10th update, the firm highlighted that the marker used to gauge Bitcoin's long-term worth relative to its market share has risen above the midpoint, sitting in risk-heightened territory. Such an elevated risk level is common during the nascent phases of a Bitcoin bull market, signalling that long-term investors are now operating at a significant profit margin, a scenario highlighted in Glassnode's February 8th report. After the rebound following the FTX fall-out, this signpost reached 2.06, stepping into the high-risk domain. This is a familiar sight during the early spurts of bull markets, indicating that long-haul investors have regained a significant profit margin.
The market value to realized value (MVRV) indicator for long-term holders is designed to point out instances where Bitcoin is over or underpriced relative to what it should ideally be worth. It juxtaposes the "market value" of Bitcoin with its “realized value," the latter being the price at the time Bitcoin moved between long-term holder wallets. This technique filters out fleeting market emotions, yielding an index that flashes a warning when the market gets too heated. Bitcoin's price has seen an upward trajectory over the past week, soaring from $42,317 on February 4th to $48,582 at present, according to CoinGecko. Bitcoin's price has spiked up by 14% within this week.
The recent solidity of Bitcoin is being credited to diminishing outflows from Grayscale Bitcoin Trust's fresh-off-the-press exchange-traded fund and a whopping $9.1 billion inflows into nine different Bitcoin ETFs that were launched on January 11th. Recently launched Spot Bitcoin ETFs in the United States posted a net inflow of $541 million on February 9th, excluding their trading debut, making it the highest inflow day for these assets, as per SoSoValue's crypto data. Simultaneously, Grayscale's Bitcoin Trust reported its smallest day of outflows, with just $51.8 million exiting the fund on February 9th, a staggering 91% nosedive from its peak daily outflow of $620 million on January 23rd.
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Published At
2/12/2024 4:36:06 AM
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