Key Points
- Bitcoin’s price rally has led to a surge in spot trading volume, reminiscent of the 2020-2021 bull market.
- The market has seen an influx of new investors, with the share of wealth held by coins younger than six months increasing.
Bitcoin’s ongoing price rally, which started in October 2023, has resulted in a significant increase in its spot trading volume. This is similar to the highs witnessed during the 2020-2021 bull market, as reported by on-chain data provider, Glassnode.
Despite recent price headwinds faced by Bitcoin (BTC), the daily spot trade volume of the cryptocurrency still stands at an impressive $7 billion.
Spot Trade Volume and Exchange Flows
Glassnode’s analysis of the coin’s spot trade volume involved comparing the 180-day moving average with the 30-day moving average. The results showed a faster average trade significantly higher than the slower one since the market rally began.
This suggests that Bitcoin’s year-to-date growth is backed by robust demand in spot markets. Moreover, the price rally has also caused an increase in the flow of coins in and out of cryptocurrency exchanges. The monthly average of total Exchange Flows is currently at $8.19B per day, notably higher than the peak in the 2020-2021 bull market.
New Investors and Bitcoin Holders
The market rally has also resulted in a rise in the number of new investors holding Bitcoin. As long-term holders distribute their long-held coins for gains, these are being picked up by new investors looking to profit from the market rally.
According to Glassnode’s assessment of Bitcoin’s Realized Cap HODL Waves, there has been a rally in the share of wealth held by coins younger than six months. Over the past year, the supply of Bitcoin held by addresses younger than six months has significantly increased, standing at 47% at the time of reporting.
The on-chain data provider suggests that the capital held within the Bitcoin holder base is roughly balanced between long-term holders and new demand. It is important to note the behavior of these new investors as their share of the capital increases.
These new Bitcoin holders are typically more price-sensitive than long-term holders and are ready to offload their coins once Bitcoin’s price falls below their cost basis.
