This year’s massive crypto rally was driven by the Bitcoin spot market, with on-chain analysis offering a unique look into the current state of the market cycle, according to Glassnode.
Bitcoin Spot Volume: Now Versus 2021
Examining Bitcoin trading activity, spot volumes peaked at $14.1 billion in March, similar to levels seen at “the height of the 2020-2021 bull market,” wrote the firm in a Tuesday report. Those volumes have since cooled to about $7 billion per day in April.
Similarities to the 2021 bull run are also visible when applying a fast/slow momentum indicator to spot volume. As of April 6, Bitcoin’s 30-day moving average for volume was $9.59 billion – significantly higher than its 180-day volume average of $5.95 billion.
In fact, net exchange flows – inflows plus outflows from Bitcoin exchanges – are now significantly higher than in 2021, reaching $8.19 billion per day.
“Overall, Bitcoin’s YTD price action is supported by a significant uptick in spot trade volume, and exchange flows on-chain,” Glassnode wrote.
Back in January, a major force within the Bitcoin spot market emerged in the form of U.S. Bitcoin spot ETFs. According to a separate analysis this week by lead Glassnode analyst James Check, spot ETFs now account for about 30% to 50% of the major forces affecting Bitcoin’s spot price.
How Big are the #Bitcoin ETFs Anyway?
Latest @_checkonchain analysis is live, and we’re addressing two key questions I’ve received a lot lately:
1) How big is the impact of the ETFs?
2) Is $GBTC really Long-Term Holder supply?Enjoy folks!https://t.co/SRU8oj37qB pic.twitter.com/jqLC7ePMeF
— _Checkmate 🟠🔑⚡☢️🛢️ (@_Checkmatey_) April 9, 2024
The substantial effect of Bitcoin ETFs on spot trading is visible on weekends: the newly launched funds don’t trade then, and on-chain spot volumes are “notably lower” as a result.
Also like 2021, exchanges have had a notable taker-buy volume bias, with their spot volume delta against maker-sell volume reaching $143.6 million last month. This is in stark contrast to the net sell side bias that exchanges experienced throughout 2023 until October, despite Bitcoin’s price experiencing few pullbacks during that time.
The State Of The Bitcoin Cycle Today
Looking at Bitcoin’s price directly, the coin only recently broke its 2021 all-time high of $69,000 in March, and has consolidated close to that peak ever since. Based on prior all-time high breaks, Bitcoin has seen minimal major pullbacks, indicating that the current “euphoria” phase of the bull market is still in its early stages.
Furthermore, capital invested by short-term holders (less than 6 months) reached peaks of between 84% and 95% in the last two bull cycles. That’s based on Bitcoin’s “realized cap” – a measure of the value of all coins in the network based on the time that each coin last moved.
Today, that figure sits at 47% – significantly higher than the 20% at which it stood in January, but not quite at market peak levels.
“This suggests that the capital held within the Bitcoin holder base is roughly balanced between long-term holders and new demand,” Glassnode said.
