Key Points
- Bitcoin’s recent rally above $72,000 has pushed market sentiments into the ‘Euphoria Zone’ according to a Glassnode report.
- Long-term holders (LTHs) have begun distributing their holdings for profit, marking a shift in investor behavior.
Bitcoin’s [BTC] recent surge above $72,000 has led to a significant shift in market sentiment. The leading cryptocurrency is now trading at its fourth cycle all-time high. This shift in market sentiment has been labeled as the ‘Euphoria Zone’ by Glassnode in a recent report.
Change in Investor Behavior
Historically, this phase has been marked by new highs in the coin’s value and a shift in investor behavior. The realized price, which tracks the average price at which all coins in circulation were last bought or sold, has been growing by $54 billion per month. This growth mirrors the surge observed during the general market rally in early 2021, indicating a considerable inflow of liquidity into the current market.
Glassnode noted that the significant capital inflows into Bitcoin have been partly driven by the success and demand for new US ETF products. In tandem with this, there has been an increase in the wealth held by ‘young coins’, or coins that have changed hands in the last three months.
Shift in Accumulation/Distribution Patterns
According to Glassnode, Bitcoin bull cycles are typically marked by a transfer of wealth from old to young. This occurs as investors who acquired their coins at lower prices several months or years ago see the new highs as an opportunity to distribute for profit. This shift in accumulation/distribution patterns can be observed by looking at the coin supply held by long-term holders (LTHs) and short-term holders (STHs).
Glassnode reports that LTH supply has decreased by 660k BTC since its peak in November 2023, while STH supply has surged by 810k BTC during the same period. This cohort of investors has obtained their coins from two primary sources: 660k BTC transferred from LTHs and 150k BTC withdrawn from exchange balances. This transfer of wealth from investors who have held on to their coins for years to new investors reflects a healthy balance between distribution pressure and new demand.
