Bitcoin’s surging price has once again captured the attention of traders and speculators, as indicated by on-chain data. Glassnode, a leading blockchain intelligence firm, highlighted in a recent newsletter how risk appetite is on the rise among various groups within the Bitcoin market, including institutional investors and short-term holders.
The massive influx of capital into Bitcoin since the beginning of the year has seen the asset’s realized cap increase by $30 billion to reach $460 billion, just 3% shy of its all-time high. Simultaneously, the market price of Bitcoin has surged by 29% to $57,000 during this period. The concept of “realized cap,” which evaluates the total value of all Bitcoins based on their last sale, provides valuable insights into the market.
By analyzing the MVRV ratio against Bitcoin’s market cap, investors can gauge the profitability of holding the cryptocurrency. Currently sitting at 2.14, the ratio indicates a relatively high value, although not enough to suggest that Bitcoin is approaching its cyclical peak. Glassnode stated that the average Bitcoin investor is now holding an unrealized profit of +120% per coin, underscoring the improved profitability in the market.
The resurgence of interest in trading and speculation is evident through the rising on-chain daily trading volume on Bitcoin exchanges, nearing a record of $5.57 billion in recent weeks. The influx of deposits from short-term holders signifies the speculative nature of the renewed interest in Bitcoin.
Moreover, the introduction of Bitcoin exchange-traded funds (ETFs) has added a new dimension to the demand for BTC, with over $6 billion worth of Bitcoin absorbed by such funds since their launch on January 11. These ETFs have provided institutional buyers with greater flexibility in their investment strategies.
The increase in open interest in Bitcoin futures and options in recent months, reaching $20.5 billion and $17.8 billion respectively, further indicates the growing interest in derivative trading within the market. This trend highlights the willingness of traders to bet against the prevailing uptrend, leading to liquidations as a result.
Overall, the influx of capital, rising profitability for investors, and growing interest in trading and speculation indicate a bullish sentiment in the Bitcoin market, with various factors contributing to the current market dynamics.
