According to insights from IntoTheBlock, as Bitcoin (BTC) swiftly approaches its historic peak price, an overwhelming majority of BTC holders find themselves in a profitable position once again. Specifically, the data reveals that 95% of Bitcoin addresses are currently in profit, marking the highest proportion since November 2021, when BTC was trading at comparable price levels. This resurgence in profitability underscores the resilience of Bitcoin and the renewed optimism among investors as the cryptocurrency continues its upward trajectory.
Will Bitcoin Bull Run Continue?
Although profits signify success for investors, a widespread presence of profitable positions in the market can also signal overheating, potentially prompting a sizable portion of investors to capitalize on their gains by selling off their holdings.
To gauge market heat amidst this backdrop, IntoTheBlock recommends monitoring the MVRV ratio, which compares the “market value” of all BTC against the value when they were last traded. Historically, a high MVRV ratio nearing 4 has signaled market tops, although this figure has decreased with each market cycle. Presently, the MVRV ratio stands at 2.22, indicating a relatively lower level compared to previous cycles.
Furthermore, additional on-chain data provided by Glassnode suggests a resurgence in speculative trading activity within the BTC market. Notably, Bitcoin inflows to exchanges are approaching record highs, primarily driven by short-term holders who are more inclined towards speculative trading. This uptick in speculative activity hints at a heightened level of market activity and potential volatility in the near term.
What’s Driving Up Bitcoin’s Price?
On Monday, Bitcoin experienced a surge in price, reaching $57,000 and surpassing yet another two-year high. This notable ascent coincided with a continued influx of capital into Bitcoin ETFs, with the newly launched funds absorbing an impressive $520 million in inflows on that day alone. Notably, BlackRock’s iShares Bitcoin Trust recorded a staggering $1.3 billion in daily trading volume, signaling robust investor interest in Bitcoin-related investment products.
Many analysts view Bitcoin ETFs as a key driver in propelling the asset towards its previous all-time high of $69,000, potentially even before the upcoming Bitcoin network “halving” event scheduled for April. This outlook is unprecedented for Bitcoin, which historically has seen significant price surges following, and arguably influenced by, the halving event. During the next halving, the rate of BTC production per day will decrease from 900 to 450 coins.
IntoTheBlock has observed this trend and suggests that the halving could indicate a potential upswing in Bitcoin’s price. The firm noted that the current cycle deviates from historical patterns, with prices rallying earlier than expected. This divergence may indicate that investors are anticipating and acting upon the “halving effect” well in advance.
Last week, Tom Lee from Fundstrat offered a bullish prediction, foreseeing that both ETFs and the halving could drive Bitcoin’s price to soar to $150,000 by the end of 2024. This optimistic forecast underscores the growing optimism surrounding Bitcoin’s potential for further appreciation and institutional adoption in the coming years.
