“Bitcoin has the same vibe as mid-2020”
Key facts:
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There are high levels of bitcoin whale activity.
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For Willy Woo, institutional traders show signs of having a risk appetite again.
According to Ki Young Ju, founder and CEO of the data company on-chainCryptoQuant, there is currently the same “vibe” in the bitcoin (BTC) market as in mid-2020. This is indicated based on the movements of the “whales” (investors with more than 1,000 BTC) and price volatility .
In mid-2020, remember that the price of bitcoin was around $10,000 (USD) for 6 months with high activity on-chain, driven by the appearance of new whales. This indicated that there was purchasing pressure from large investors that was not yet reflected in a price increase due to the offer that counteracted it.
Now, he warns that, despite the low price volatility, activity on-chain remains high with $1 billion added daily to new whale wallets. In this sense, the outlook for 2024 looks similar to that of 2020, as can be seen below.
In the following graphs you can see the price of bitcoin in black and the realized capitalization of the new whales in blue. This last metric indicates the last moved bitcoin supply from new investors with more than 1,000 BTC.
This panorama represents positive signs for the market, since an increase in new whales reflects the bullish sentiment of large investors. As long as the number of these investors continues to grow as now, this could break the current period of price lateralization with an upward movement.
As reported by CriptoNoticias, the price of bitcoin has been in a stage of consolidation and lateralization for two and a half months. This comes after it reached a new all-time high at $73,700, as seen in detail below.
Bitcoin market shows positive signs
A report from the analyst known as Tarekonchain shared by CryptoQuant reinforces this long-term bullish view for the market with an indicator. It bases this on the market value to realized value (MVRV), which measures whether an asset is undervalued or overvalued compared to its historical value.
Historically, bitcoin has reached the peak of a bull market when the MVRV surpassed the 3.5 level and the bottom when it fell below 1. Currently, it is at 2.3, as seen below. Therefore, the analyst maintains that there is still room for the price to rise significantly.
“This means that we are still some way away from the peak, and the price will reach a new high in this cycle,” he says. For the specialist, the maximum of the current bull market could be above the psychological level of USD 100,000.
Tarekonchain considers that, even if the price drops, it is a buying opportunity for long-term investors. In his opinion, the output should only start when the MVRV indicator approaches a value of 3.
Meanwhile, analyst Willy Woo highlighted that The first signs are seen that professional or institutional bitcoin traders may be moving to a risk-appetite scenario. This can be seen in the following graph, which indicates an upward reversal of the risk-off toward risk-on.
Willy Woo explains that a scenario of risk-off translates into selling pressure while risk-on in buying pressure, since bitcoin is seen by many investors as a risk asset like stocks. Consequently, if we actually enter this area of risk appetite, the price could experience increases.
