The Euphoria and Struggle of Bears: Bitcoin’s Journey to $70,000
The market has entered a euphoric phase with Bitcoin’s surge above $70,000, leaving all coin holders in a profitable position.
In the history of crypto, this marks the fourth cycle characterized by recurring patterns. Let’s explore how the euphoric phase typically unfolds, why bears failed to suppress the price this time and what lies ahead for the market.
1. Buyer-Seller Dynamics
Following the breach of an all-time high, long-term holders start to sell off their holdings, while short-term holders are just beginning to engage.
Long-term holders reached their peak holdings in November last year and have since reduced their combined volume by 660k BTC. Conversely, short-term holders have increased their assets by 810k BTC during the same period.
This distribution pattern recurs each time the price reaches new highs.
2. Heightened Emotions
The euphoric phase witnesses a surge in speculative interest and fear of missing out on profits (FOMO). This translates into a buying bias in the futures market, where the funding rate surpasses average values.
Typically, increased speculative activity is followed by heightened volatility and sudden corrections. However, this time, bulls are bolstered by exchange-traded funds (ETFs), purchasing an average of $250 million worth of Bitcoin daily. This leaves little opportunity for bears to capitalize on the excessive optimism of other participants.
If current market trends persist, a supply shock is anticipated due to substantial demand from buyers and sellers’ reluctance to part with crypto at current prices. This situation is poised to escalate post-halving, when coin issuance is halved. Most forecasts align on Bitcoin surpassing the $100,000 mark this year.
Cryptocurrencies involve complexity and carry a high risk of rapid monetary loss due to volatility and changing regulatory landscape. It’s crucial to ensure you understand how cryptocurrencies operate and can withstand the potential high-risk scenario of losing your assets.
This campaign is not region-specific and should not be interpreted as an invitation to engage in cryptocurrencies operations.
