Glassnode analysis shows that the recent crypto rally was primarily driven by the Bitcoin spot market, with on-chain data providing insights into the current market cycle. Spot trading volumes for Bitcoin peaked at $14.1 billion in March, similar to levels seen during the 2020-2021 bull market, and have since cooled to around $7 billion per day in April. The 30-day moving average for spot volume was significantly higher than the 180-day average, indicating increased trading activity. Net exchange flows, which include inflows and outflows from Bitcoin exchanges, have also surged to $8.19 billion per day, supporting Bitcoin’s year-to-date price action.
A major development in the Bitcoin spot market in January was the emergence of U.S. Bitcoin spot ETFs, which now account for 30% to 50% of the major forces influencing Bitcoin’s spot price. The impact of these ETFs on spot trading is particularly noticeable on weekends when the funds do not trade, leading to lower spot volumes. Exchanges have also shown a taker-buy volume bias, with spot volume delta against maker-sell volume reaching $143.6 million last month, a shift from the previous net sell-side bias experienced by exchanges in 2023. Despite minimal pullbacks, Bitcoin’s price recently broke its 2021 all-time high and has been consolidating close to that peak.
Glassnode’s analysis of Bitcoin’s current market cycle suggests that the coin is still in the early stages of the “euphoria” phase of the bull market. Historically, Bitcoin has seen minimal major pullbacks after breaking previous all-time highs, indicating that the current bull market may continue. Capital invested by short-term holders (less than 6 months) has reached levels between 84% and 95% in previous bull cycles. However, based on Bitcoin’s “realized cap,” which measures the value of all coins in the network based on the time of their last movement, the current figure stands at 47%, higher than the 20% in January but not yet at peak market levels. This suggests a balance between long-term holders and new demand within the Bitcoin holder base.
Overall, the analysis highlights the significant impact of Bitcoin spot trading volumes, exchange flows, and the emergence of Bitcoin spot ETFs on the current state of the market cycle. The data points to continued bullish momentum in Bitcoin’s price, with indicators suggesting that the coin is still in the early stages of a potential bull market. The balance between long-term holders and new demand within the Bitcoin holder base also indicates a healthy market environment. As the crypto market continues to evolve, on-chain analysis will play a crucial role in providing valuable insights into market trends and dynamics.
