Bitcoin (BTC) has experienced a remarkable surge in price, surpassing $73,000 on March 13 and marking a more than 200% increase over the past year. Market intelligence firm Glassnode suggests that this rally has pushed investor sentiment into a state of euphoria, with wealth shifting from long-term holders to new investors.
Glassnode’s recent report, “The Week Onchain,” highlights that Bitcoin’s recent surpassing of its previous all-time high of $69,000 in November 2021 constitutes the fourth new cycle all-time high in its history. Analyst Checkmate notes that Bitcoin’s rally above $72,000 has propelled the current bull run into the “Euphoria Zone,” a phase typically associated with new all-time highs.
This sentiment is further supported by data from Alternative, which indicates that market sentiments and emotions are in the “extreme greed zone” at a rating of 81. In this zone, investors tend to become greedy as the market rises, leading to fear of missing out (FOMO) as speculators enter the market.
Glassnode also observes a shift in investor behavior, particularly in the balance between long-term holders (HODLers) and speculators. Historically, moments like this have seen a transfer of wealth from older to younger investors. The distribution pressure from investors who accumulated Bitcoin at lower prices in the past has intensified as the cryptocurrency reaches new all-time highs.
Additionally, Glassnode data reveals a 54% increase in the number of new Bitcoin wallets over one month, rising from 308,743 to 475,005. This growth aligns with Bitcoin’s 58% gains during the same period.
The on-chain analytics firm also notes an increase in short-term supply holders by 810,000 BTC since November 2023, which can be attributed to 660,000 BTC transferred from long-term holders and 150,000 BTC withdrawn from monitored exchange balances. In contrast, the supply held by long-term holders has declined by 660,000 BTC.
The rally in Bitcoin’s price has prompted profit-taking by long-term holders, which is being offset by inflowing demand from short-term holders. This is evident in the increase of the realized profit metric, which provides insights into capital inflows, demand strength, and network profitability. Glassnode suggests that this is a sign of the start of the euphoria phase, similar to what was observed during the bull runs in 2017 and 2021.
According to Cryptoslate analyst James Van Straten, there is a slight accumulation of Bitcoin ahead of its issuance due to consistent record profit-taking from both short and long-term holders, amounting to $4 billion on March 11.
It’s important to note that this article does not provide investment advice or recommendations. Readers are encouraged to conduct their own research before making any investment decisions.