Research Summary
The report analyzes Bitcoin’s recent rally towards all-time-highs, focusing on the impact of demand inflows from US Spot ETFs and the supply released by Long-Term Holders taking profits. It also examines the role of institutional capital and the distribution pressure exerted by Long-Term Holders.
Key Takeaways
Bitcoin’s Surprising Rally
- Unanticipated Market Performance: Bitcoin’s price is attacking the all-time high (ATH) again, surprising the market with its strength even before the anticipated halving event. The average transaction size with Coinbase has spiked, indicating the entry of new institutional capital into Bitcoin.
Impact of US Spot ETFs
- Significant Demand Inflows: The approval of Spot ETFs for US markets has led to strong demand, with Bitcoin trading at $68.0k, 58% higher than $42.8k at the time of ETF approvals. This has resulted in a net capital inflow into Bitcoin of around $267M/day, explaining the market’s rebound towards new ATHs.
Long-Term Holders’ Profitability and Distribution Pressure
- Increasing Unrealized Profit: With the market nearing ATHs, the unrealized profit held by long-term investors and their distribution pressure have increased. Long-term holders are, on average, sitting on an unrealized profit of ~228%.
- Spending Patterns: Long-term holders have started to ramp up their distribution pressure, hitting spending rates of 257k BTC/month. This trend has been observed in all prior cycles as the ATH is challenged.
Role of Institutional Capital
- Increased Inflows: The average inflow and outflow transactions have reached considerably higher values, particularly with Coinbase. The average transaction size peaked at 4.3 BTC/Tx at the time of the ETF approval, indicating the size and scale of new institutional capital entering Bitcoin.
Market Dynamics and Future Trends
- Market Shift: The report suggests that the current market dynamics represent a meaningful phase shift, with demand inflows potentially offsetting Long-Term Holder spending for several months ahead, based on historical patterns.
Actionable Insights
- Monitor Long-Term Holder Activity: Given the increasing distribution pressure from Long-Term Holders, it’s crucial to keep an eye on their spending patterns and the impact on Bitcoin’s price.
- Assess Institutional Capital Inflows: The entry of new institutional capital into Bitcoin, particularly through Coinbase, is a significant market development. Tracking these inflows can provide insights into market trends and potential shifts.
- Understand the Impact of US Spot ETFs: The approval of Spot ETFs has led to significant demand inflows into Bitcoin. Understanding the ongoing impact of these ETFs on Bitcoin’s price and market dynamics can inform future market predictions.
