Bitcoin price suggests a new market cycle, driven by greater institutional involvement and improved on-chain fundamentals that are creating a new growth model for Bitcoin.
Table of Contents
According to Ki Young Ju, founder of CryptoQuant, the current bullish run will give rise to a good move in terms of prices, but with lower volatility compared to previous cycles.
Bitcoin Price Cycle May Be Different This Time
CryptoQuant founder, Ki Young Ju, highlighted that the Bitcoin bull cycle will be able to provide a 3x to 5x gain rather than the much higher 10x gains or even more that have been seen during certain cycles in the past.
The market dynamics for the cryptocurrency have evolved due to its size and institutional involvement. This evolution may prevent the massive price movements that used to occur during previous cycles.
In previous bull markets, retail demand, combined with market illiquidity, enabled capital to drive the price of Bitcoin up rapidly, which was then followed by sharp corrections where Bitcoin could lose 80 percent of its value from the highs of the cycle.
In his opinion, Ju does not think that the present market environment will allow for such an occurrence since Bitcoin now has much higher market capitalization and the participation of institutions.
It means that the Bitcoin price may be able to keep rising throughout the bull run without experiencing some of the wild swings experienced in the past.
At the time of writing, BTC is trading at $ 86,885 with a 24-hour trading volume of $ 47.25 billion and a market cap of $ 1.75 trillion. BTC price increased 1.74% over the last 24 hours.
Also Read | SoFi Launches Stablecoin Settlement for $25B Mastercard Card Program
On-Chain Data Points to Changing Bitcoin Price Dynamics
Ju also mentioned various chain-based metrics that he considers evidence of his claim about another Bitcoin cycle.
The MVRV ratio of Bitcoin is above 1 in the current cycle of Bitcoin. MVRV ratio of Bitcoin represents the comparison between the market value of Bitcoin and the realized value of Bitcoin. It is a metric that can be used to determine whether the market is trading above or below the overall cost basis of the market.
Another development that has occurred is the increased realized capitalization of Bitcoin.
Another aspect that Ju pointed out is the behavior of early adopters of Bitcoin. Based on his observation, “OG” whales have lessened their selling activities compared to other cycles.
One possible reason behind the strength in the Bitcoin price despite weak market conditions is the decrease in selling activities among long-term holders.
However, Ju noticed that the major futures players were forming a long position around the bottom of the cycle, while the 365-day PnL Index by CryptoQuant shows that the current Bitcoin cycle may be at an important inflection point.
Bitcoin ETF Holders Return to Profit
Institutional participation is also turning out to be an increasingly integral aspect of the Bitcoin ecosystem.
Crypto analyst Crypto Patel on September 23 noted that Bitcoin had regained the estimated average cost basis of the Bitcoin ETF at $81,722.
It has put the average Bitcoin ETF investor in the profitable zone after months of being below this mark. It becomes increasingly important since the spot Bitcoin ETFs have turned out to be an important entry point for institutional BTC participation.
In addition, the new launch also introduces yet another dynamic in the existing Bitcoin price cycle. This is because the Bitcoin market has seen the entry of more investors through investment vehicles regulated by law rather than just retail investors.
As long as Bitcoin stays above the cost basis of ETF holders, it is still capable of sustaining the recovery story. However, the price action can also shift rapidly.
Bitcoin Price Outlook Remains Closely Watched
The improvement in on-chain metrics, less distribution from the old owners, and the comeback of the Bitcoin ETF investors for their gains have made the ongoing market cycle more relevant.
Ju’s estimate of 3x to 5x shows how he feels about Bitcoin making important progress while having less volatility compared to other cycles.
At the same time, the Bitcoin price still depends on the general liquidity, investor demand, and position changes in the market. The on-chain metrics can be a good guide for investors, but they cannot predict the exact course of the market.
In this case, one of the events affecting the current cycle is the return of ETF players to profitability and the actions of long-term Bitcoin investors.
Also Read | AERO Price Eyes Breakout to $1 as Ecosystem Activity Strengthens
