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On-chain data shows that the rapid rise in Bitcoin prices is attracting traders and speculators back into the market.
In a press release on Tuesday, blockchain intelligence company Glassnode highlighted how risk appetite among various groups in the Bitcoin market, including institutional buyers and short-term holders, has increased.
Bitcoin holders are profiting again:
Since the beginning of this year, Bitcoin has seen significant capital inflows, with the asset's realized cap increasing by $300 billion to reach $460 billion, just 3% below its all-time high. Meanwhile, the market price of the asset has surged by 29% to $57,000.
"Realized cap" measures the value of all bitcoins based on the last time these coins were sold.
When measuring the MVRV ratio against Bitcoin's market cap, one can estimate the average profitability of Bitcoin investors. The ratio currently stands at 2.14, which is a relatively high value but not enough to indicate that Bitcoin is nearing its cyclical high.
Glassnode wrote: "With this strong performance, Bitcoin investors' profitability has significantly increased, with the average investor now holding +120% unrealized profit per coin."
The return of speculators:
The company identified a rising interest in trading and speculation, as evidenced by the increase in on-chain daily trading volume in and out of Bitcoin exchanges, with Bitcoin trading volumes reaching nearly record highs of $5.57 billion in recent weeks. The influx of deposits primarily comes from short-term holders, highlighting the speculative interest in recent returns.
Glassnode continued: "Since October 2023, the number of deposits per day from the STH group has exceeded 1% of its supply, peaking at 2.36% in recent ETF-led speculative activities." "This is the largest relative deposit since the sell-off in March 2020."
Bitcoin exchange-traded funds (ETFs) are also significant and visible sources of sustained demand for BTC. Since their launch on January 11, these funds have absorbed over $6 billion worth of BTC. Glassnode notes that they have opened up "a new degree of freedom for demand and speculation," particularly for institutional buyers.
Finally, open interest in Bitcoin futures and options has surged over the past two months, reaching $20.5 billion and $17.8 billion, respectively. The latter reached a historic high of $20 billion in January, far exceeding 2021 levels.
Glassnode points out: "This seems largely directional, as many traders continue to bet on the current uptrend (and subsequently get liquidated)." |
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Post time 8-3-2024 12:41:15