Bitcoin quietly ignites a bull run as attention stays on stocks

Bitcoin is roaring back. While everyone has been fixated on the stock market, Bitcoin has been creeping up, launching a bull market that most weren’t paying attention to.

In the last 12 months, the total crypto market has added $1.3 trillion in value. If Bitcoin were a company, it would now rank as the eighth largest in the world.

Over the past year, Bitcoin has soared 142%. Since the start of this year, it’s up 55%, outpacing every single component in the Dow Jones. This rise in risk appetite has boosted Bitcoin, leaving other asset classes behind.

Compared to gold, Bitcoin is blowing it out of the water, having surged more than 312% since the beginning of 2023, while the precious metal is up just 45%. 

Demand surge driving prices

Last week, Bitcoin demand spiked, growing at its fastest monthly rate since April. Apparent demand shot up by 177,000 Bitcoin, pushing the price up more than 5%, hitting $67.8K, the highest price in ten weeks.

Back then, when demand reached 496,000 Bitcoin, the price had surpassed $70K. Now, a similar trend could be on the way.

The link between demand and price growth is clear. In the past, growing demand was a key driver behind Bitcoin’s record-breaking rallies in 2020, 2021, and now, 2024.

To sustain any further rally and possibly break into new all-time highs, demand needs to keep expanding. So far, things look quite promising.

Meanwhile, Bitcoin spot ETFs have been net buyers recently, buying nearly 8,000 Bitcoin in a day, the highest since July.

On average, the ETFs bought around 9,000 Bitcoin daily in the first quarter of 2024, pushing the price higher. If this trend continues into the final quarter of the year, it could lead to new all-time highs.

Whales are piling in

Big investors are still holding onto their Bitcoin. Whale balances, excluding exchanges and mining pools, have been climbing steadily over the last year.

Right now, they’re holding a total of 670,000 Bitcoin, which is well above the 365-day moving average—a strong signal that Bitcoin’s bull run still has legs.

And don’t forget the seasonality factor. Historically, Bitcoin has performed well in the fourth quarter, especially in halving years.

Looking back, Q4 2012, 2016, and 2020 saw Bitcoin rise by 9%, 59%, and 171%, respectively. This year’s trend is looking quite similar.

On the network activity side, things are heating up. The number of active addresses (an indicator of how much activity is happening on the Bitcoin network) has been on the rise. 

The 30-day moving average is getting closer and closer to the 365-day average, which could become a golden cross. The number of transactions has also remained elevated, showing that trading activity is still strong.

What on-chain metrics tell us

Open interest, or the total value of all open futures contracts, is at a record $20 billion. The last time open interest was this high, the market saw significant volatility.

If prices continue rising, expect more of the same as traders reposition themselves. The realized price, which looks at the average price paid for Bitcoin by different holders, shows that short-term holders (those who’ve held for 1-3 months) have an average cost basis of $63,767 USDT.

If Bitcoin dips below $66,000 USDT, selling pressure will increase as these holders rush to lock in profits, potentially driving prices lower. But if Bitcoin holds above $66,000, it’ll likely keep the current upward momentum.

The Stablecoin Supply Ratio (SSR) has bounced back, signaling that stablecoins are being used to buy more Bitcoin.

Since July, Bitcoin’s price has been forming higher highs and higher lows, a clear signal of a bullish market structure.

But there’s a catch. The pattern forming is a rising wedge. Rising wedges often lead to sharp price corrections if the price action tightens too much. If this happens, expect volatility, especially if Bitcoin crosses a significant level, triggering a wave of profit-taking.