Key Points:
– Approximately 93.4% of the Bitcoin supply is currently held in profit, indicating a new “euphoria” phase in the market.
– Euphoria phases typically last for 6-12 months, suggesting that there is further upside potential for Bitcoin.
– Long-term holders and funds have started re-accumulating Bitcoin after a period of selling, indicating that the market is likely to continue its upward trend.
Bitcoin investors have begun accumulating coins once again after a period of selling. This shift towards re-accumulation comes as the price of Bitcoin consolidates just below its all-time high, which was reached in March 2024.
In early March, Bitcoin reached a new record price of $73,000. However, at that point, long-term holders who had been holding onto their investments for over 6 months started selling a significant supply of Bitcoin, causing the price to correct by 20.3% to around $57,500 by late April.
The shallow correction from Bitcoin’s peak in March indicates that there was no excessive speculation or unsustainable high prices during the initial surge. This pattern is similar to the healthy bull cycle that occurred between 2015 and 2017 before Bitcoin experienced exponential growth.
However, recent data shows that as the price of Bitcoin has recovered to around $70,000, long-term holders have been accumulating more Bitcoin over the past month. Their total holdings have increased by approximately 12,000 BTC since late April as they take advantage of the price dip.
The resurgence of demand for Bitcoin ETFs is also contributing to this accumulation by long-term holders. After experiencing net outflows of $148 million per day when the price was around $57,500, Bitcoin ETFs have seen net inflows of $242 million per day in recent weeks.
This significant inflow of institutional demand is in stark contrast to the daily sell pressure of $32 million from miners. The demand from ETFs is nearly eight times larger than the selling pressure from miners, indicating a strong institutional buy-side demand for Bitcoin.
Another key metric that signals a new “euphoria” phase for Bitcoin is the percentage of the supply in profit. Currently, 93.4% of Bitcoin’s circulating supply is held at an unrealized profit compared to spot prices, surpassing the statistically significant threshold of 90%.
Historically, breaking above this 90% threshold has preceded prolonged uptrends in the price of Bitcoin. In previous bull cycles, this marked the beginning of a “pre-euphoria” phase, where some long-term holders started taking profits. As Bitcoin continues to reach new all-time highs, the true “euphoria” phase emerges.
During the “euphoria” phase, Bitcoin experiences 6 to 12 months of sideways price action, with the percentage of the supply in profit hovering between 80% and 95%. The current “euphoria” regime is still relatively young, at just 2.5 months old.
With such a large percentage of the Bitcoin supply currently held at a profit and the “euphoria” phase only just beginning, many analysts believe that the market is primed for further upside after the current consolidation period concludes.