Bitcoin continues to make headlines, currently aiming hard for the $40,000 mark. This year, Bitcoin has seen a surge of about 120%, but the typical “Fear Of Missing Out” (FOMO) associated with bull markets has been notably absent.
A closer analysis of on-chain transactions reveals that Bitcoin’s journey is still in its early stages, with “younger” Bitcoins only just beginning to engage in the network’s activities.
This article dives into the various factors contributing to Bitcoin’s current trajectory and the potential implications for its future.
Analyzing the Current State of Bitcoin
At the core of this analysis lies the Realized Cap HODL Waves metric, also known as RHODL waves.
Created by Philip Swift, the founder of Look Into Bitcoin, RHODL waves divide Bitcoin supply into age groups and compare it to the price at which the supply last moved on-chain.
Swift’s examination of RHODL waves reveals an increase in short-term transactions, typical of bull markets, but without the widespread FOMO often seen in these phases.
This trend suggests that while Bitcoin is near its 18-month highs and has surpassed several key resistance levels, the market has not yet reached the fever pitch of activity that typically characterizes the height of bull markets.
The increase in smaller wallet numbers without a corresponding return of short-term speculators to the network further supports this observation.
The Road Ahead for Bitcoin
Focusing on Bitcoin’s supply ‘age bands,’ Onchained, a contributor to the on-chain analytics platform CryptoQuant, highlights that those who increased their Bitcoin exposure during the run-up to the 2021 all-time highs are still underwater.
The Net Unrealized Profit/Loss (NUPL) indicator, which provides profitability ratios for cohorts of stored coins, is nearing a crucial point for holders who have held Bitcoin for 18 months to 3 years.
These holders are approaching a breakeven point if Bitcoin’s rally continues beyond $39,000.
Data from CryptoQuant shows that only 11.6% of unspent transaction outputs (UTXOs) are currently at a loss. This statistic indicates a generally profitable state for most Bitcoin holders, despite recent selling activities by whale entities at current price levels.
As Bitcoin inches closer to the $40,000 mark, the community watches with bated breath.
The convergence of various factors, including the behavior of long-term holders, new entrants into the market, and the actions of large-scale investors, will play a pivotal role in determining whether Bitcoin can breach this significant threshold and sustain its upward momentum.
Bitcoin’s journey towards $40k is marked by unique market dynamics, differing from previous bull runs.
The absence of widespread FOMO, coupled with the engagement of newer segments of Bitcoin, paints a picture of a maturing market that is still finding its footing.
Whether Bitcoin reaches and surpasses the $40k mark remains to be seen, but the indicators suggest a market ripe with potential and at the cusp of another significant phase in its ever-evolving narrative.
