In the aftermath of the recent approval of spot Bitcoin ETFs, the cryptocurrency market has shown remarkable resilience, rebounding from the initial sell-the-news sentiments. According to a report from Glassnode, Bitcoin’s price performance since the 2022 lows exhibits striking similarities to previous cycles, showcasing a slower but more robust recovery.
Despite a slight uptick in spending on older coins after the approval of ETFs, most long-term Bitcoin investors appear hesitant to sell their holdings at the current price levels. Although network activity is relatively low in terms of entities, on-chain monetary volume, particularly towards exchanges, remains robust, mirroring patterns seen in past bull market cycles.
In terms of cycle positioning, the current Bitcoin cycle is marginally ahead of the 2016-17 and 2019-20 periods, with the price currently standing at 37.3% below its all-time high. Notably, the current cycle demonstrates heightened resilience, experiencing relatively shallow corrections, with the largest drawdown being only 20.1% in August 2023.
GBTC Overhang Slows Bitcoin’s Recovery
Despite this, recent weeks have seen a downside momentum in prices as the market adapts to the dynamics of spot ETFs. Key on-chain levels, such as Short-Term Holder Cost Basis and True Market Mean Price, are being closely monitored for potential support levels during market uptrends.
The recovery in the market is also grappling with the significant supply overhang from the GBTC product, leading to a slower pace of recovery compared to previous cycles. The Realized Cap metric indicates a recovery rate for the current cycle that is the slowest on record, partly attributed to redemptions from the GBTC product after its conversion to a spot ETF.
While long-term HODLers remain resilient, with the majority of the Bitcoin holder base steadfastly holding their coins. Supply Last Active metrics indicate a slight downtick in older supply movements, suggesting a non-trivial volume of older supply has been on the move recently.
On-chain activity metrics reveal a counterintuitive observation, with the number of active entities declining despite strong price performance. However, transfer volumes remain robust, pointing to an increased presence of institutional investors and large capital flows. Nevertheless, the approval of nine spot Bitcoin ETFs is a significant milestone for digital assets, attracting institutional flows despite challenges posed by the GBTC product’s conversion.
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