Valuable Insights: Bullish Period for Bitcoin Imminent, CryptoQuant Analysis Suggests
In the world of cryptocurrency, indicators play a crucial role in understanding market trends and investor sentiment. One such indicator, known as the ‘Supply in Profit,’ provides valuable insights into the current state of the market. In its latest analysis, CryptoQuant explores this indicator and uncovers patterns that hint at an upcoming bullish period for Bitcoin.
The Supply in Profit indicator tracks the percentage of Bitcoin that is currently held at a profit. In other words, it measures the extent to which the price at which Bitcoin was bought is lower than the current market price. When Bitcoin’s price surpasses previous highs, this metric becomes particularly significant, as it indicates that the majority of holders could sell their coins for a profit. This, in turn, creates a positive market sentiment.
During bull markets, it is common for the Supply in Profit indicator to maintain levels between 90% and 100% for extended periods, ranging from six to twelve months. Such sustained high levels indicate a strong market where investors are generally making profits. This fosters confidence among investors and reduces the likelihood of mass sell-offs.
CryptoQuant has introduced a novel approach to understanding this indicator by incorporating the ultra-long-term moving average (1,500 DMA) with ±1 standard deviation. This approach allows for a better understanding of the metric over Bitcoin’s cycles, which align with its four-year halving events. Observations from this analysis show that when the Supply in Profit exceeds the upper boundary of this range, it consistently indicates the onset of major bull markets.
Historically, there is a precursor phase where the indicator briefly surpasses the +1 standard deviation band before fully entering a bull market. For instance, the 2015-2018 cycle lasted 580 days, while the 2019-2022 cycle spanned 280 days.
Currently, we find ourselves approximately 180 days into a potential bull phase, with the pattern suggesting that the bullish trend might extend well beyond three months. This is especially true considering the recent approvals of both BTC and ETH spot exchange-traded funds (ETFs). These financial products are expected to attract significant capital inflows, further bolstering the bullish outlook.
Looking at the last two cycles, the bullish trend lasted approximately 300-600 days. If we observe a similar pattern in the current cycle, we can expect the upward momentum to continue for at least another three months.
The approval of spot ETFs for Bitcoin and Ethereum is a significant development in the cryptocurrency sector. It has the potential to catalyze more institutional and retail investment. With these ETFs making it easier for a broader audience to access Bitcoin and Ethereum, we can expect an influx of new capital that could sustain and even accelerate the ongoing bullish trend indicated by the Supply in Profit metric.
CryptoQuant’s analysis, which combines historical data with current trends, offers a reasoned perspective on the potential continuation of the current market upswing. As the cryptocurrency landscape continues to mature, tools like the Supply in Profit indicator prove invaluable for investors seeking to understand the dynamics of bull and bear cycles in this volatile market.
Tags: BTC
