Blockchain analytics firm says Bitcoin (BTC) is still in a “euphoria phase” despite its recent correction based on on-chain metrics.
In a new report, the firm says BTC’s current downward price action is still tame compared to previous cycles, suggesting that the crypto king is in the earlier stages of a bull run.
“If we return to the magnitude of drawdowns we alluded to earlier, we can see that despite the large-scale profit taking by existing holders, the magnitude of pullbacks remains historically small.
If we compare the ATH (all-time high) break in prior cycles, it could be argued that current Euphoria phase (market in price discovery) is still relatively young. Previous Euphoria phases have seen numerous price drawdowns exceeding -10%, with the majority being much deeper, with 25%+ being commonplace.
The current market has seen just two ~10%+ corrections since the ATH was broken.”
Glassnode says that based on an on-chain analysis of the industry’s biggest exchanges, Bitcoin’s strength over the last year is largely due to inflows from the spot market. The firm also says that BTC’s shorter-term correction is being supported by the “new demand” from fresh entrants to the market.
“The strong market performance of Bitcoin over the last 12 months is supported by a remarkable uptick in both spot trade volumes and on-chain flows associated with exchanges. By analyzing the Cumulative Volume Delta, we can also gauge that the demand side has been remarkably strong, albeit with bids patiently taking the maker side rather than the taker side.
With the market now above the 2021 ATH, profit-taking has ramped up but is cooling down in recent weeks. The balance of wealth is approximately balanced between long-term holders and new demand, suggesting the ‘Euphoria’ phase is still relatively early from a historical perspective.”
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