Grayscale, a leading digital currency investment firm, dives deep into the current Bitcoin market, declaring it’s firmly in the midst of a bull run. Their report analyzes various metrics, painting a picture of a market fueled by strong fundamentals and technical indicators.
Spotlighting the Bull Run’s Drivers
The report dissects historical bull runs, highlighting key factors. One crucial element is Bitcoin’s dominance, often preceding a surge in altcoins. Investors, buoyed by Bitcoin gains, typically venture into riskier altcoin markets seeking higher returns. Grayscale analyst Michael Zhao confirms this trend, citing the 2021-2022 bull run as a prime example.
This bull run, however, boasts three unique catalysts: spot Bitcoin ETF inflows, positive stablecoin inflows, and a decline in Bitcoin held on exchanges.
Spot Bitcoin ETFs have been a game-changer, attracting significant capital. Grayscale reports inflows surpassing Bitcoin issuance by over 3 times, putting upward pressure on prices.
Healthy on-chain fundamentals, including stablecoin supply on exchanges, further bolster the rally. Rising stablecoin liquidity indicates more capital available for trading, fueling the bull market.
Not Just Buying Frenzy: A HODLing Story
The lack of selling pressure is another crucial factor. Glassnode data reveals the total Bitcoin on exchanges has dropped to a five-year low of around 12% of the total supply. This signifies investors are holding onto their Bitcoin (HODLing), anticipating future price growth.
The “Fifth Inning” of the Bull Game
Grayscale uses a baseball analogy, suggesting we’re currently in the “middle phase” or “fifth inning” of the bull run. Analyzing the Net Unrealized Profit/Loss (NUPL) ratio, they show that as the price rises, investors haven’t sold. However, with the NUPL at 60% (compared to historical peaks above 70%), we might be nearing a cycle high based on this metric.
Retail Investors: A Mixed Signal
Bull markets thrive on euphoria, FOMO, and retail investor participation. While Grayscale acknowledges lower retail interest compared to 2021, data from Alternative reveals market sentiment mirroring the 2021 peak. This suggests a potential return of retail investors, with their associated “greed” and FOMO potentially driving prices further.
Grayscale concludes that the bull run is here to stay, but advises investors to monitor spot Bitcoin ETF flows and broader economic factors for potential shifts. Analyst Michael Zhao emphasizes, “While progress has been made, we believe there is still room left to run.”
This information is not legal advice. Do your own research before making any decisions. Only invest what you can afford to lose and seek independent financial advice if needed. Understand the risks involved before purchasing any cryptoasset